CA FINAL PAPER 7:
DIRECT TAX LAWS AND INTERNATIONAL TAXATION





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Practice before writing your exam
Quiz
Mock series
Revision test paper
CA Final paper -2022
CA Final paper -2021
CA Final paper -2020
Other Subjects:
P1: Financial Reporting
P2: Strategic Financial Management
P3: Advanced Auditing and Professional Ethics
P4: Corporate & Economic laws
P5: Strategic Management and Performance Evaluation
P6A: Risk Management
PB: Financial Services and Capital Markets
P6C: International Taxation
P6D: Economic Laws
P6E: Global Financial Reporting Standards
P6F: Mulidisciplinary Case Studies
P8: Indirect Tax Laws
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Test your preparation
Question
Answer
Question 1 Distinguish between ‘tax evasion’ and ‘tax avoidance’.
Answer:
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Tax evasion means a method of evading tax liability by dishonest means like suppression, conscious violation of rules, inflation of expenses etc. while tax avoidance means planning for minimization of tax burden according to the provisions of the tax laws and within legal framework, though it defeats the basic intention of legislature.
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Tax evasion generally begins after the liability of tax has arisen, whereas tax avoidance begins before the actual liability of tax has arisen.
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Tax evasion involves use of unfair means while tax avoidance takes into account various lacunas of law.
Question 2 :Distinguish between tax planning and tax evasion.
Answer :
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Tax planning is carried out within the framework of law by availing the deductions and exemptions permitted by law and thereby minimising the tax liability. Tax planning is an arrangement by which full advantage is taken of the concessions and benefits conferred by the statute, without violation of legal provisions
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Tax evasion on the other hand is an attempt to reduce tax liability by dubious or artificial methods or downright fraud. It is illegal and denies the state its legitimate share of tax