suresh Key Differences Between Tax Evasion and Tax Avoidance
When it comes to taxes, it's important to distinguish between tax evasion and tax avoidance. Both terms refer to strategies individuals or businesses may use to minimize their tax liabilities, but there are crucial differences between the two:
Tax Evasion:
Tax evasion is the illegal act of deliberately underreporting income, overstating deductions, or hiding assets to avoid paying taxes owed. It is considered a criminal offense and is punishable by law.
Tax Avoidance:
Tax avoidance, on the other hand, is the legal practice of using legitimate tax planning strategies to reduce one's tax burden. This may involve taking advantage of tax deductions, credits, and loopholes provided by the tax code. While tax avoidance is legal, aggressive or unethical tax avoidance practices may attract scrutiny from tax authorities.
It's important for individuals and businesses to understand the distinction between tax evasion and tax avoidance to ensure compliance with tax laws and regulations.
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