Tax evasion is considered as one of the biggest drawbacks for the Indian economy. Recently the government said Only 1 percent of the Indian population pays income tax and declares earnings above the non-taxable income. Only 5.78 crore income tax returns were filed by individual taxpayers for the financial year 2018-19 till February 2020. Out of this, only 1.46 crore individual taxpayers filed returns declaring income above Rs 5 lakh, Anurag Singh Thakur, MoS, Ministry of Finance, said in a reply to a question in Lok Sabha. we can clearly say tax evasion still a major drawback for the Indian economy. Let us know a brief about tax evasions.

As per OECD, tax evasion is a phrase used to mean illegal arrangements where liability to tax is hidden or ignored, i.e. the taxpayer pays less tax than he is legitimately bound to pay by hiding income or data from the tax authorities. Thus, evasion refers to the minimization of the tax burden by unlawful or fraudulent means. In Tax evasion taxpayer attempts to reduce his tax burden by showing lower/reduced income than the actual payment intentionally. An assesse guilty of tax evasion is punishable under the applicable laws with fines and penalties varying from 100% to 300% of the tax evaded.

Tax evasion includes declaring a false statement intentionally, presenting misleading records, suppression of facts, not maintaining proper records of income earned, the omission of material facts in assessments, using false documents to claim deductions/exemptions, etc.

Example: Preethi Industries Ltd. installed an air conditioner costing Rs. 20,000 at the residence of an executive as per terms of his appointment. But the company treats it as fitted in the quality control section in the factory. The company manipulated fact intending to treat it as a plant for computing depreciation.

Recently the government said that it had taken numerous steps to control evasion such as searches and seizures surveys, inquiries, assessment of income, levy of taxes, penalties, filing of prosecution complaints in criminal courts, for the timely detection of tax evasion, compulsory quoting of PAN for various cash transactions, etc. However, despite the attempts, the number of instances of tax evasion is at high levels.

This article does not intend to hurt the sentiments of any individual, community, sect, or religion, etcetera. This article is based purely on the author’s personal opinion and views in the exercise of the Fundamental Rights guaranteed under Article 19(1)(A) and other related laws being enforced in India for the time being.