What is the difference between Tax Avoidance & Tax Evasion?
Tax avoidance refers to legal measures to use the tax regime for finding ways to pay the lowest rate of tax, e.g., putting income from house property in the name of your partner or dependent to take advantage of their lower tax band. It is not performed through bad intention but by complying through the provision of law.
While Tax evasion means taking illegal steps for avoiding paying tax, e.g. not declaring income to the taxman, over claiming the expenses, showing lower income, etc. It is performed through an unlawful way of paying taxes and defaulter may get punishment.
For the purpose of Tax Avoidance, Government has provided various ways in which a person can legally restrain tax on his income
Whereas on the other hand, various penalties have been imposed by the government for Tax Evasion