Skip to content

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

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

Tax planning is arranging business affairs lawfully, within both the letter and the spirit of the law, to use deductions, exemptions and incentives as intended. It differs from evasion, which involves concealment or falsification, and from avoidance, which exploits loopholes against legislative intent.

  1. AConcealing income from the tax authorities by maintaining false books of account
  2. BArranging business affairs within the letter and spirit of law to obtain legitimate tax benefitsCorrect
  3. CUsing a legal loophole purely to defeat the intention of the legislature
  4. DShowing sale proceeds in a bank account of a related person to avoid disclosure

Explanation

Tax planning means arranging affairs within the framework of law, using deductions, exemptions and incentives as the legislature intended. Concealment and false books are evasion, and exploiting loopholes against legislative intent is avoidance.

Did you get it right without looking?

One question tells you little. A timed set on Tax Planning and Nature of Business shows your real accuracy, how long you take and where you lose marks.

Practise Tax Planning and Nature of BusinessFree diagnostic mock

More Tax Planning and Nature of Business questions