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Learn the implications of evading taxes

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Information about Learn the implications of evading taxes
Business & Mgmt

Published on February 25, 2014

Author: canadaupdates

Source: slideshare.net

Description

Paying taxes is considered to be a pain by many. And therefore, they try to find out means and ways of not paying them accurately.
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Paying taxes is considered to be a pain by many. And therefore, they try to find out means and ways of not paying them accurately. Tax Evasion A trust, individual or a firm trying to avoid paying taxes by adopting unfair and illegal means by hiding the correct information on income from the tax authorities is called tax evasion. There are people submitting false reports, providing incorrect information about their income and also presenting losses for a business doing profits are common ways of avoiding to pay the right amount as taxes. There are yet another set of people who are into smuggling or making an effort to getting away by not paying the custom duty on the goods they import from other countries. They perform this act by choosing a long route of importing valuable goods. The retailers who show a less sale to avoid reflect the true amount of VAT acquired from the consumers. The effect of tax evasion The first and direct impact would be on the Government who would find its revenue generation to go down. In the absence of financial resource availability, the Government would supply the facilities in an inadequate fashion. When people overbuy a commodity and hold it privately, there is a rise in the prices, and this could be something related to daily needs like food items and or even expensive materials like gold. The leakage in a transparent market would actually lead to inflation. The process of scrutiny Whenever the tax authorities evaluate a case to be of tax evasion then the process of scrutiny is initiated. The Officer assessing the income tax submitted by an individual or a firm is supposed to go through the filed returns, the supportive documents, the bank statement, Form 16 and any other relevant documents which would reflect the pattern of income and circulation of money related to the firm. One should not be surprised, if the income tax officer asks for the income details of all the family members and other related documents too. A case for scrutiny can be chosen within a year of filing the returns. This means, if a person has filed returns on 30th day of July, 2012 then he may get an intimation regarding scrutiny by 29 th day of July 2013.

A date would be provided for meeting and presenting the case before an income tax officer, however, the case can always be handled by a representative who could be a professional expert in this matter. Selecting a case for scrutiny The Income Tax Department follows certain guidelines for choosing a case for scrutiny. They are mentioned below: • • • • • All the returns filed can be scrutinized. Any return which shows a claim of deduction for an amount of Rs.25 lakhs or even more, and if this according to Chapter VI-A, Income Tax Act. Any return where the refund is claimed of an amount Rest. 5 lakh and or even more than that. There are people who make a withdrawal of less than Rs. 50,000 in a year. It shows that the person is dependent on any other source for meeting the daily needs. Specific Instructions are provided to the computer and cases can be chosen from there by using Computer Assisted Scrutiny System (CASS). The consequences one may face Tax evasion caught and proven by the Income Tax Department would make a person go through strict actions. And this would be based upon the kind and amount of evasion one has made. One should be prepared to pay a triple amount of the sum one has concealed. If one has evaded Rs.20, 000, then he or she should be prepared to pay an amount ranging from Rs. 20,000 to Rs.60,000. Getting cautioned If you are a salaried person then you need not only rely upon Tax deduction at Source, you must evaluate your income overall bad get an advice from an expert. There are many sources of generating income and for each of them taxes may not get deducted at source, so you need to calculate or get the same calculated by an expert to be on the safe side. Apart from paying more, you will have to go through the rigours stages of stress which will bring you more pain than benefits. Evading taxes is no way to make money. As a responsible citizen you must always pay the right amount of taxes so that the Government is able to provide you with best of resources.

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