Need for Introduction of Anti-Avoidance Measures

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....o better understand the purpose of introducing Anti-Tax Avoidance measures, it is necessary to be familiar with the concept of and distinction between Tax Evasion, Tax Avoidance and Tax Planning. Tax Planning - Tax planning means reducing tax liability by taking advantage of the legitimate concessions and exemptions provided in the tax law. It involves the process of arranging business operations....

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....s and leaseback of assets, so that the depreciation is diverted but the asset remains with the assessee. Tax Evasion - Tax Evasion means avoiding tax by illegal means. Generally, it involves suppression of facts, falsifying records, fraud or collusion. It is an attempt to evade tax liability with the help of unfair means. Tax evasion is illegal and would result in punishment by way of penalty, fi....

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....d: * Deferment of tax liability * Re-characterization of an item of income or expenses to tax at a lower or nil rate * Permanent elimination of tax liability * Shifting of income from a high-taxed to a lower-taxed person / jurisdiction * These techniques are carried out by using following methods: * Treaty Shopping- use of favorable tax treaties * Creation of artificial intermediary ....