As you earn money it gives you enormous pleasure. A pleasure of a different kind altogether. It gives a tremendous sense of satisfaction and personal worth. One needs money which acts as stimulus and motivation for all our earthly activities. That is why this mad search for opportunities of making money on-line, making money off-line ! We are ever after those affiliate marketing programmes , MLM, ad-posting , PTC, e-mail reading, work from home opportunities. And after the income is made and earned, there comes the question of spending a part of it for yourself and sharing the rest with your family and society. Thus there are several stakeholders in our income and earnings. But of all the stakeholders there is particularly one with which we generally dislike to share our income with is Income Tax Authorities. Although income tax is, which is a personal tax and a form of direct tax, is collected by the tax authorities on behalf of the government and goes to the national exchequer and put to use to achieve various objectives. The issue is whether we can make use of some provisions of the Income Tax Act which authorizes levy and collection of this tax on us. The answer is a resounding “yes”.


Let us not confuse ourselves with the terms “Tax Evasion” and “Tax Avoidance” while the former is a crime and the latter is a perfect legitimate tool in our hands to reduce our tax liability even to nil through tax planning devices. It is relevant and extremely important to go through what the House of Lords observed in a case : “ A subject is entitled to arrange his affairs so as to reduce his liability to tax. The fact that the motive for a transaction may be to avoid tax does not invalidate it unless a particular enactment so provides.” However, it is material to note in this regard that transaction or the arrangement by which the tax is being sought to be avoided should not be sham.

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