Tax Evasion And Avoidance: A Critical Comparative Study Of Legislative Frameworks In India And The UK
- IJLLR Journal
- Jun 18
- 2 min read
Harsh Raj, Galgotias University
ABSTRACT
Tax evasion and tax avoidance are significant global issues that directly affect national revenues, economic equality, and the integrity of tax systems. Although both methods lead to diminished government revenue, they fundamentally differ: evasion encompasses unlawful actions like underreporting income or exaggerating costs, while avoidance involves leveraging legal loopholes to lower tax obligations. Notwithstanding this contrast, both occurrences compromise the integrity of tax law and elicit legislative and administrative reactions from governments across various jurisdictions. This research paper rigorously analyses the legislative frameworks concerning tax evasion and avoidance in India and the United Kingdom (UK), providing a comparative assessment of their effectiveness, structure, and execution. India, characterised by its developing economy and intricate tax structure, has traditionally had considerable difficulties in tax compliance. In response, it has established a variety of legislative instruments, including the Income Tax Act of 1961, the General Anti- Avoidance Rules (GAAR), and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act of 2015. These are augmented by judicial interpretations and administrative directives promulgated by the Central Board of Direct Taxes (CBDT). Nevertheless, India persists in contending with challenges like informal economies, inadequate enforcement, and constraints in international collaboration. The UK exemplifies a developed economy characterised by a relatively stable tax system that prioritises anti-avoidance measures through statutory and common law rules. Significant initiatives are the Finance Act 2013, which established a principle-based General Anti-Abuse Rule (GAAR), the Disclosure of Tax Avoidance Schemes (DOTAS) framework instituted by the Finance Act 2004, and specialised anti-avoidance rules (TAARs) designed for particular tax planning methods. HM Revenue & Customs (HMRC) is pivotal in enforcement and oversight, aided by a proactive judiciary that reads tax legislation with a purposive approach rather than a literal one. The document contrasts the two countries based on several criteria: statute design, administrative enforcement, judicial methodology,
