How Tax Avoidance by People Leads to an Imbalance in the Government Budget

How Tax Avoidance by People Leads to an Imbalance in the Government Budget

Shruthi S, Prof. Deepak Shyam (Guide)

Dept. Of Management Studies,

PES University

ABSTRACT

This study explores how avoidance of taxes affects public services, economic inequality, and the financial stability of the Indian government. The literature study explores the complicated nature of tax legislation in India, highlighting the necessity of a strong anti-tax avoidance framework. The technique sets forward goals include comprehending tax avoidance, determining its causes and effects, and examining strategies used. The scope includes a thorough analysis of the literature on tax avoidance, a look at the causes and consequences, and a study at the relationship between tax avoidance and government revenue. The data analysis focuses on the landmark decision of "McDowell & Company Limited vs. The Commercial Tax Officer," emphasizing the differentiation made by the court between legitimate tax planning and illegal tax avoidance. Findings emphasize the case has had a significant impact on tax jurisprudence, established limits for acceptable tax planning, and maintained the anti-avoidance concept in Indian tax law.