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at Forensic Sciences University (GFSU) Tax Evasion: A Forensic Expert’s Viewpoint CA Vikram Shankar Mathur BA (Eco) Hons, FCA, DISA (ICAI), FAFP (ICAI) +91-9998090111 | +91- 8460890111 Email: [email protected] Web: https://fcavsmathurfaculty.wordpress.com 16-Jan-2017 CA Vikram S. Mathur 1

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Tax Evasion: A Forensic Experts Viewpoint

Tax Evasion:A Forensic Experts ViewpointCA Vikram Shankar MathurBA (Eco) Hons, FCA, DISA (ICAI), FAFP (ICAI)

+91-9998090111 | +91-8460890111Email: [email protected]: https://fcavsmathurfaculty.wordpress.com16-Jan-2017CA Vikram S. Mathur1

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Tax Evasion: Defined

16-Jan-2017CA Vikram S. Mathur2Source: https://en.wikipedia.org/wiki/Tax_evasionExtracted: 09-Jan-2017 10:30 Hours IST

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Tax Avoidance: DefinedTAX AVOIDANCE: Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase ones taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands. ~ Judge Learned Hand (http://quotes.liberty-tree.ca/quote/learned_hand_quote_6bf7)16-Jan-2017CA Vikram S. Mathur3

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Tax Avoidance vs Tax EvasionTax Avoidance

Tax Evasion

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Comparison By Reasons:

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Tax Gap By Reason in UK

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Global Tax Evasion by Profession (in 2009)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)What then are the remedies on a long-term basis?All individuals / corporates / firms / other legal taxable entities (AOP / BOI / PSU / Trusts etc.) should go for:Tax PlanningTax ManagementCombination of Tax Planning and Tax Management16-Jan-2017CA Vikram S. Mathur9

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)What is Tax Planning?

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)What are the ways in which tax evasion takes place?16-Jan-2017CA Vikram S. Mathur14

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Who is responsible for Tax Evasion in India.There are many ways and people who practice tax in India , mainly lawyers and chartered accountants - always are in the lookout for ways to save tax. Some of them, unscrupulous elements they read between the lines of tax laws and devise the way to evade the tax. The dierence between avoidance and evasion is a thin line , which can be judged only from point of context and facts in which the method of saving tax was applied. One way it can be read as avoidance and another way it can be taken as evasion ~ Prashant Thakur @http://taxworry.com February 2, 2014.This is where we must mention that there are two major aspects of legally reducing our tax liability: Utilizing Deductions From IncomeTaking Capital Losses16-Jan-2017CA Vikram S. Mathur15

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Some Tax Evasion Attempts During DemonitizationGold Purchases:InGujarat,Delhiand many other major cities, sales of gold increased on 9 November, with an increased 20 to 30% premium surging the price as much as45,000(US$670) from the ruling price of31,900(US$470) per 10 grams (0.35oz).Multiple bank TransactionsThere have also been reports of people circumventing the restrictions imposed on exchange transactions and also attempting to convert black money into white by making multiple transactions at different bank branches.

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Seven ways to escape tax legally when investing in the name of family members.Invest gifted money in tax-free instrumentExhausted your 80C limit? Transfer some money to your non-working spouse or minor child and invest that sum in a tax-free instrument such as PPF or ELSS funds, tax free bonds and Ulips. The gift tax rules won't apply to these relations, including any of your or your spouse's lineal ascendants or de scendants. Therefore, you can transfer any amount you want. Since you are investing in a tax-free instrument, even the clubbing of income clause won't affect your tax liability.Deduction available in case of minor childYou can claim a deduction of up to `1,500 per child for two children in case of investments made in the name of minors. This means you can invest, say, `15,000 (or `30,000, for two kids) in a one-year FD scheme which gives a return of 10% and be exempt from tax.There is no tax on long-term gainsNot interested in locking your money in long term investments or fixed assets? Invest the l gift money in stocks and equity mutual funds e and hold for more than a year. There is no capital gains tax on equity assets held for g more than 12 months. In case of gold and property and debt-oriented mutual funds, the holding period is 3 years.The clubbing is only at the first levelIf earnings are reinvested, it will be treated as your relative's income. This means the second year onwards, you'll have no further tax liability on that money. You can use this strategy even if your spouse is earning, but falls in a lower tax bracket.Adult children are big tax saversThe clubbing rule does not apply once your child turns 18. Since the person is treated as a separate individual for all tax purposes, you can transfer money and enjoy another `2.5 lakh exemption along with all the other deductions and benefits that other taxpayer enjoys. You can start investing if the child is turning 18 before 31 March of that financial year and benefit for the entire year.Clubbing not applicable in case of parentsYou can also invest in your parent's name and the best part is the clubbing rules won't be applicable here. Also, there is no gift tax on the money you give to your parents. So, make use of their a basic tax exemption limit-`2.5 lakh for up to 60 years, `3 lakh for those above 60 and `5 lakh if they are above 80. In case they are exceeding the exemption limit, help them save taxes.Show the monetary transaction as a loanThe clubbing provision is applicable on earnings from gifted money . However, if you show the transaction as a loan where your relative pays you a nominal interest, income from the investment will not be taxable.16-Jan-2017CA Vikram S. Mathur22Source: http://economictimes.indiatimes.com/wealth/tax/seven-ways-to-escape-tax-legally/articleshow/47564284.cms

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)AREAS OF TAX PLANNING IN CONTEXT OF INCOME TAX ACT, 1961For the business entities already in existence:Tax planning in respect of corporate restructuring;Tax planning in respect of financial management;Tax planning in respect of employees remunerations;Tax planning in respect of specific managerial decisions;Tax planning in respect of Foreign Collaborations and Joint Venture Agreements;Tax planning in the light of various Double Taxation Avoidance Agreements.

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)Conclusions for curbing Tax Evasion in IndiaIt is essential that organizations and individuals alike go for Tax Planning, with objectives such as:Reduction of tax liabilityMinimization of litigationProductive investmentHealthy growth of economyEconomic stabilityEssentials of Tax Planning :Up to date knowledge of tax laws and awareness of judgments made through various decisions of the courts.The disclosure of all material information and furnishing the same to the IT department.Tax Planning should not just comply legal provisions as stated but should be within the framework of law.A planning must be capable of attainment of business objectives and be amenable to its possible future changes.

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Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)16-Jan-2017CA Vikram S. Mathur25

An Analysis of All Tax PayersBy Range of Salary Income(AY 2012-2013)As can be seen, the highest income bracket of 6 entities pay the maximum tax of Rs. 6,872.97 Lakhs, which is where the maximum attention ought to be focused.

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)On the Lighter Side16-Jan-2017CA Vikram S. Mathur26The Cayman has almost completely fixed its tax evasion problem. . . or so you would think, on reading the latest report from its Financial Reporting Authority Cayfin. We can't find a link to the report itself, which doesn't seem to have been published yet, but in any case here is a Chart depicted from a table: ===================So let's see - that shows tax evasion at just one percent of all suspicious activity reports. Impressive! Time to crack open the champagne.

Even more impressive, given that its Confidential Relationships (Preservation) Law states that you can go to prison in Cayman not only for divulging confidential information, but merely for asking for it!

And then there is the whole issue of Cayman directors as a fig leaf, which we noted (and updated) recently.

Joking aside, we should state that while Cayman deservedly has a terrible reputation for its secrecy, it probably isn't as sleazy as some. Such as the British Virgin Islands.

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)CA Vikram Shankar Mathur

Mobile: +91-9998090111 / +91-8460890111Email: [email protected] Website:http://fcavsmathurfaculty.wordpress.comPersonal Website:http://vsmathur.co.inFacebook Profilehttp://facebook.com/vsmathurco

16-Jan-2017CA Vikram S. Mathur27For listening so patiently!!

Gujarat Forensic Sciences University (GFSU)

Gujarat Forensic Sciences University (GFSU)