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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Corporate Tax Planning

In the context of corporate tax planning in India, which of the following best describes tax evasion as distinct from tax planning?

Tax evasion means deliberately concealing income or furnishing false particulars to reduce tax. It is illegal and punishable. Claiming allowed deductions, choosing a tax-incentivised location, or comparing lease and purchase are lawful planning decisions made within the law's framework.

  1. AClaiming a deduction that the law expressly allows after making a qualifying investment
  2. BChoosing a location for a new unit in an area where the law offers a tax holiday
  3. CDeliberately concealing income or furnishing false particulars to reduce tax payableCorrect
  4. DSelecting between a lease and a purchase after comparing the tax effect of each

Explanation

Tax evasion is the illegal reduction of tax liability by concealing income, inflating expenses or giving false information. The other three options are lawful choices made within the framework of the law, which is what tax planning means.

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