Question

What are the effects of Tax evasion?

Answer 1

1. Tax evasion results in black money.
2. It prevents the resource mobilization of the Central Government leading to a shortage of funds.
3. It leads to distorting the saving and Investment patterns of the economy and the availability of resources for various sectors of the economy.
4. Tax evasion undermines the equity attributes of the tax system.
5. Tax evasion and black money encourage the concentration of economic power in few hands.
6. It consumes the time and energy of the tax administration to find out the tax evaders and put them under the right stream.