What is tax fraud?

When an individual or a business entity hides or conveys false information to save on tax it is known as what is tax fraud or tax evasion. Tax evasion is illegal in India and if an individual is found to violate tax guidelines he/she has to pay a penalty fee. 

In recent years, it was found that companies and people who were supposed to pay taxes were not paid. So, it is important for us to learn how some individuals avoid paying taxes and what kind of penalties are to be paid when guidelines are violated.

Common methods of tax fraud:

• Not paying the tax

• Smuggling

• Submitting falsified tax returns

• Submitting wrong financial statements

• Submitting falsified documents to save on taxes

• Not reporting income

• Bribery

• Keeping unidentified wealth and assets outside the country.

I hope you understand now what is a tax fraud.

If the income tax departments find out about the wrongdoings they may charge a penalty fee. Some of them include:

• Collecting 100% to 300% tax when the income is not revealed.

• A penalty fee may be imposed if you fail to pay taxes but it cannot exceed the amount that is due.

• If a company fails to maintain their accounts properly they will be charged Rs. 25,000 as a penalty fee under Section 44AA.

• The tax department can charge Rs.1.5 lakh or 0.5% if a company fails to show the audit report. 

These are some of the penalties related to tax. I hope you have a clear idea about what is tax fraud now.

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