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POSTGRADUATE RESEARCH PROJECT
(As per New Education Policy -2020)

The Effect Of Tax Evasion And Tax Avoidance And The

Supporting Data

NAME: Ashmita Bajpai

CLASS: M.COM

[ PROJECT SUPERVISOR]
[DR. Shalini Kapur]

DEPARTMENT OF COMMERCE

Christ Church College, Kanpur

ACADEMIC YEAR: 2023-2024

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 ACKNOWLEDEMENT
I would like to express my profound gratitude to teacher of Christ Church College department of
Commerce and university for their contributions to the completion of my project

university project. Firstly, I express our deepest appreciation to our project supervisor, Teacher for their
invaluable guidance, support, and expertise throughout the entire duration of this project. Their
constructive feedback and insightful suggestions have significantly contributed to the refinement I would
like to extend our heartfelt gratitude to all those who have contributed to the completion of this of our
work and its overall success.

I am also thankful to Teachers for their academic mentorship and the knowledge they imparted during
our university studies. Their teachings have been instrumental in shaping our understanding and
approach to this project.

Furthermore, I wish to acknowledge the contributions of our fellow classmates and colleagues who have
provided assistance, encouragement, and valuable insights that have enriched our project.

Additionally, I extend our gratitude to the university administration for providing the necessary resources
and facilities for the execution of this project.

Lastly, I would like to thank my family and friends for their unwavering support, encouragement, and
understanding throughout the challenges and demands of this academic endeavour.

This project would not have been possible without the collective efforts and support of all those
mentioned above. I am deeply grateful for their contributions to the success of our university project.

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 TAX EVSAION AND TAX AVOIDANCE
INTRODUCTION:

Two common behaviors that can have a major impact on the economic prosperity in India
are tax avoidance and tax evasion. Tax avoidance refers to finding loopholes in the Income Tax
to lower tax obligations, whereas tax evasion is the use of illegal methods by people or companies
to evade paying taxes. The economy of a nation may be severely harmed by each of these actions.
In light of the substantial financial losses resulting from tax evasion and avoidance, it is imperativ
e to examine the impact of these practices on India's economic growth.

Tax revenue is the main source of funding for the Indian government's social programs, infrastruct
ure, to promote economic growth. When people or companies fail to pay their taxes,
It lowers the amount of money the government can take in, which can result in poorer public
services, budget deficits, and a general slowdown in the rate of economic growth.
State government revenue is reportedly negatively impacted by tax violations. It should be
highlighted that India's tax system is ineffective and ineffective overall, and that tax evasion and
avoidance are widespread throughout the nation's economy, undermining both
economic expansion and budgetary stability.

A National Institute of Public Finance and Policy (NIPFP) study estimates that tax avoidance and
evasion cost India about Rs. 9.6 trillion annually.
The research also shows that tax avoidance and evasion have become more of an issue in recent y
ears, which has led to a fall in tax revenue, a rise in the budgetary deficit, and a fall in public spen
ding.

A study by the International Monetary Fund (IMF) emphasizes the negative effects of tax evasion
and avoidance on economic growth.
The study comes to the conclusion that tax avoidance and evasion reduce investment, lower the st
andard of public services, and erode public trust in the government.
Development and economic growth are thus declining.
Additional investigation has also shown that there are other underlying reasons for tax avoidance a

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 nd evasion.

These consist of low taxpayer compliance, inadequate legislative frameworks, and ineffective tax
administration.Corruption and a lack of political will also have a major impact on tax evasion and
avoidance in India.

ABSTRACT

Tax evasion and tax avoidance are two practices that have significant effects on the Indian economy. Tax
evasion includes engaging in illegal activities to avoid paying taxes in full. Both tax avoidance and tax evasion
cause a loss of government revenue, which may restrict governmental spending on infrastructure, social
welfare, and development programmers. Tax avoidance refers to the legal exploitation of tax law loopholes
to minimize tax liability. Income disparity is also worsened by tax avoidance and evasion, which also damages
public trust inthe tax system. In the past, the tax evasion and tax avoidance of a large informal sector, poor
tax administration, and complicated tax laws have allowed tax evaders to thrive, resulting in significant
revenue losses that have made it difficult for the government to fund public services.

The Indian government has implemented a numberof measures that target taxavoidance and evasion in the
current situation. These include improving tax legislation, enhancing tax administration, and utilizing
technology to increase compliance and transparency. Tax evasion is being battled and a tax system that is
more equitable is being promoted through initiatives such as demonetization, the implementation of the
Goods and Services Tax (GST), and the creationof theDirect TaxCode. Thispaper explores multi
dimensionsoftaxavoidanceand tax evasion in the view of current government laws, policies and preventive
measures, how it has affected the Indian economy and the judicial interpretation of tax evasion and
avoidance.

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LITERATURE REVIEW

IMPACT OF TAX AVOIDANCE AND TAX EVASION IN INDIA- Journals for Asia-Pacific,
The study by Manjula Bai Hathi provides a framework for understanding the impacts of tax
avoidance and evasion in India. The slowing in economic development is proof that the
government is still working to combat tax evasion and avoidance, though not always effectively.
Therefore, this study's objective is to determine the best approaches for dealing with those
problems and overcoming them.
"IMPACT OF TAX AVOIDANCE AND TAX EVASION IN INDIA- A STUDY" by Manjula
Bai H., published in the Asia Pacific journal of finance and risk management (10(1)2001ELk),
was accessed on November 20, 2023.
This essay highlights the serious harm that tax avoidance and evasion do to India's economic
development. It provides evidence in favor of implementing workable steps to put an end to these
behaviors in order to promote India's sustainable economic development. Mr. Sunil Naik, Mr.
Manju. The ideas of tax evasion and avoidance, the reasons behind evasion, the several ways that
tax evasion and avoidance are committed, the government's preventive measures, and the tax laws
of 2020 and 2021 are the main topics of this article.
Effects of Tax Avoidance and Evasion on the Indian Economy Chitraksh Gupta, this essay
provides insight into the effects of tax avoidance and evasion in India. Even with all of the
government's attempts to address the problem, the rate of economic growth is still declining.

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Research Questions

 What are the primary reasons behind tax avoidance and evasion?
 How do tax avoidance and evasion affect the Indian government's ability to collect taxes?
 What steps can the Indian government take to successfully stop people from evading and
avoiding paying taxes?
 What legislative and policy actions may be implemented to encourage tax compliance and
lessen tax evasion and avoidance in India?

OBJECTIVE OF STUDY

 Analyze the overall consequences of the economy, including resource allocation, income i
nequality, and fiscal health, and look at the various tax avoidance tactics used by individua
ls and businesses. Estimate the money lost as a result of these actions.
 To comprehend the effects of these practices on the Indian economy, one must comprehen
d the scope of these activities within the nation and the resulting economic implications.
 It looks at possible legislative actions and tactics to stop tax evasion and tax avoidance, as
well as the possible advantages of doing away with these practices for the economy overall
Acknowledging the shortcomings of the nation's tax system.

RESEARCH METHODOLOGY
 This study examines the effects of tax avoidance and evasion on the Indian economy in a d
escriptive manner.
 To investigate the study question and evaluate the hypothesis, secondary sources like book
s, journals, articles, media reports, and websites are consulted for data collection.
 Furthermore, secondary sources will be examined in order to comprehend and assess the cr
iticisms made by the research paper's study.

SCOPE AND LIMITATION THIS RESEARCH

The understanding of tax evasion and avoidance is limited by the constraints of this study, which a
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lso proposes additional implications of these activities for the economic growth of emerging natio
ns like India.
In subsequent studies, the government's role in addressing the problems of tax evasion and avoida
nce is also discussed and examined.

Statement Of Problem

In India, tax avoidance and evasion are serious problems that have led to a serious
impact on the growth of the economy.
Tax evasion and tax avoidance continue to be commonplace despite government efforts to promot
e tax compliance; this results in loss of revenue and impedes economic growth.
The purpose of this problem statement is to look into how tax avoidance and evasion affect the
India's economic development, taking into account the implications for foreign investment, govern
ment revenue, and economic stability.

REASONS FOR THE TAX EVASION & AVOIDANCE

There are several reasons why an individual

avoids paying taxes, in both developed and underdeveloped countries.
The reasons for tax avoidance and evasion in affluent countries differ from those in less developed
and developing countries because developed nations have higher levels of tax knowledge.
The government's integrity is compromised by tax avoidance and evasion, which mostly results in
a decrease in tax income.
Evading and avoiding taxes results in less money coming into the government, which raises the de
ficit and forces it to print more money or borrow more, which fuels inflation.
It is necessary to analyze its situation in order to propose solutions for lowering or getting rid of it.
The following are the causes of tax avoidance and evasion:

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High tax rates:
High tax rates may act as a catalyst for tax evasion and avoidance by individuals and businesses.
People naturally look for both legal and criminal ways to lower the amount of taxes that are place
d on them when the burden of taxes is significant.
In order to lawfully reduce taxes or turn to illicit means in order to completely avoid paying taxes,
they also investigate offshore tax havens, trusts, and intricate arrangements.
Complexity of tax laws:
Because tax regulations are frequently complicated and detailed, it is simpler for people and comp
anies to take advantage of loopholes or engage in aggressive tax planning.
Confusion brought on by the complexity may facilitate tax avoidance practices that take advantag
e of ambiguous language or inconsistencies in several tax regimes.
Lack of transparency in tax systems:
In certain cases, unclear tax laws or weak enforcement practices may encourage tax evasion and a
voidance.
Bribery, corruption, and a lack of resources for tax authorities might make it more difficult for the
m to properly enforce compliance and monitor it.
This fosters an atmosphere in which people and companies could believe they can avoid paying ta
xes without facing serious repercussions.
Globalization and multinational corporations:
Multinational firms now have more options to take advantage of regional variations in tax rules an
d regulations as a result of the globalized economy.
Multinational firms can lawfully drastically lower their tax obligations by manipulating transfer pr
icing, creating intricate organizational structures, or moving earnings to low-tax jurisdictions.
Weak tax administration:
Tax evasion is more likely when there is insufficient enforcement or when tax administration instit
utions are underfunded.
Potential evaders are not deterred by poor fines, scant audit capabilities, or scant surveillance.
Perceived unfairness:
Bribery and corruption are perpetuated in such a manner that it jeopardizes all attempts to counter
tax evasion and avoidance.
Tax officials may receive lenient treatment or even full exemptions as a result of receiving bribes,
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which would result in an unjust or opaque tax system.
Some people may participate in tax avoidance and evasion because they believe the tax system is
unfair or unjust.
Tax resistance may result from their claims that taxes are not used effectively or that their burden i
s unfair when compared to others.

Informal economy: Largely informal economies put nations at higher risk of tax evasion.
In these situations, it may be convenient for people and enterprises to withhold their income or tra
nsactions from the government, which results in a large loss of tax revenue.
Financial gain and greed:
Financial gain and greed are often the driving forces behind tax avoidance and evasion.
Tax responsibilities are minimized by individuals and businesses in an effort to increase profits, re
gardless of the ethical implications or the impact on society.
Tax avoidance or evasion may be induced by the allure of keeping a larger portion of income or ea
rnings.
Ineffective tax policies:
Tax laws that do not sufficiently address exclusions, loopholes, or inequities may unintentionally
encourage tax evasion or avoidance.
Inadequately crafted policies may encourage people and companies to take advantage of legal loo
pholes or engage in aggressive tax planning.
Regulatory competition:
Countries frequently compete to draw businesses and investment in a globalized economy by prov
iding attractive tax advantages.
A "race to the bottom" where countries lower their tax rates could result from this, providing an o
pportunity for tax evasion.
Strategic tax planning:
To reduce their taxes, both individuals and corporations carefully manage their taxes.
This covers calculated choices like making tax-
advantaged investments, taking advantage of tax advantages or deductions, or organizing their aff
airs to lower their taxable income.In India, businesses try to evade or avoid paying taxes in order t
o save money for deals or agreements with hiring employees and government agencies.
Because of the high rates, experts advise against paying taxes in order to save money for the futur
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 e.
Political officials and most other legislators escape indictment because their primary sources of re
venue are unlawful methods and fixes.

TAX
A tax is a legally required fee or charge imposed by municipal, state, and federal governments on individuals
and businesses in order to finance vital public services, programmes, and operations. The government's
primary source of income is taxes. The levying of taxes is called taxation. The taxes may be imposed on the
income and wealth of persons or corporations but the rate of taxes may vary. There are other kinds of taxes like
wealth tax, property tax, gift tax, sales tax etc. The tax can be classified into various types on the basis of
nature, form, method, aim. The traditional classification of tax is direct tax and indirect tax.

DIERCT & INDIREC TTAX

Adirect tax is one that is paid directly to the taxing authority i.e., government by a person or an organization. A
direct tax cannot be passed along to another person or organization. The person or organization who is subject
to the tax is accountable for making the required payments. A taxpayer may be required to pay a direct tax to
the government for a variety of reasons, including real estate taxes, personal property taxes, income taxes,
asset taxes, FBT, gift taxes, capital gains taxes, etc.
The example of direct tax is income tax, wealth tax ,corporate tax etc.

Income tax It is a tax it is levied on the individuals to pay the tax on the basis of the income earned.

Corporate tax the corporate tax is levied on the profits that are earned by the companies.

Wealth tax is the tax levied on the basis of the wealth of the person.

INDIRECTTAX

An indirect tax is one that is imposed on a person's expenditures that is initially paid by one person but whose
burden is ultimately transferred to another person. Excise duty, sales tax, custom duties etc. are examples of
indirect taxes. GST replaced all except customs and excise to liquor and petrol in contrast to direct taxes,
indirect taxes are typically obtained from the final customer via a middleman. It is then the intermediary's
responsibility to forward the tax to the government. Everyone pays the same indirect tax rate, which is
independent of an individual's income. In India, the Central Board of Indirect Taxes and Customs (CBIC) is in
charge of overseeing indirect taxes.

Goodsandservicetax,valueaddedtax,customsdutyaresomeexamplesofindirecttax.

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DIFFERENTIATE BETWEEN TAX EVASION & AVOIDANCE

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RECOMMENDATIONS:
Strengthen Tax Administration:
By putting money into resources and technology that will increase the effectiveness of tax collecti
on, monitoring, and compliance systems, The government ought to focus on strengthening the wa
y it administers taxes. To detect and deter tax avoidance and evasion, this calls for using cutting-
edge technologies, expanding the tax base, and utilizing data analytics.
Simplify Tax Laws:
Tax laws and regulations must be rationalized and made simpler in order to close the gaps and unc
ertainties that promote tax evasion and avoidance.
The likelihood of tax manipulation can be reduced, and compliance can be raised.
by implementing a single tax code with transparent regulations.
Enhance International Cooperation:
The international collaboration of the Indian government in information sharing and tax enforcem
ent is vital, considering the worldwide scope of tax evasion and avoidance.
Strengthening bilateral and multilateral agreements with other countries can help recover and trace
assets and income from abroad.
Increase Awareness and Education:
The government should start awareness campaigns to make the public aware about the need for
timely payment of taxes and the consequences of evading and avoiding them.
This could change the public's opinion of tax compliance and encourage a culture of morality whe
n it comes paying taxes.
Reward and Whistleblower Protection:
Taxpayers who report cases of tax evasion might get rewards, which can encourage voluntary com
pliance and help uncover hidden assets and income.
Whistleblower protection laws must be put into place to protect the identity and welfare of anyone
who report cases of tax evasion.
Promote a Cashless Economy:
Promoting digital payments and reducing cash transactions can help reduce tax evasion and promo
te tax compliance.
This can be accomplished by promoting electronic payment methods, implementing demonetizati
on strategies, and building a strong digital infrastructure.
The Indian government can effectively combat tax evasion and avoidance by putting these ideas in
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to practice. This will boost tax revenue, enhance fiscal stability, and foster more confidence in the
tax system, all of which will be beneficial to the country's economy as a whole.

Methodology

Accounting students were given a questionnaire to answer in order to find out if respondents' tax a
voidance and evasion behaviors were influenced by their degree.

Survey Procedure
Students studying accounting who had not yet started their tax course received the questionnaires.
Consequently, students who had completed the diploma-
level taxes paper would not be included in the study.
Pilot Study
The questionnaire was first tested with reference to as respondents.
The five commentators' critiques of this study were constructive when creating the final survey.
Since the purpose of this pilot study was just to enhance the questionnaire's framework, the results
were not shared.
The survey instrument was refined to remove any unclear questions, and then the questionnaire w
as given to the participants.

Data Collection Method

A survey questionnaire was the instrument utilized in this quasi-experimental study. The case
based scenario questionnaires were sent to 560 students.
The case scenario questions in the survey were used to gauge respondents' basic comprehension of
the Income Tax laws, which served as the basis for the poll's conclusions.
553 of the total questionnaires distributed were completed by the beginning of the semester, result
ing in response rate of 98.75%.
At the conclusion of the semester, the sample group received the same set of questions and an addi
tional question. In the additional question, the respondents were given the following scenario:
At the end of the semester, 551 of the 560 questionnaires that were provided were returned by the

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participants, yielding a response rate of 97.25%.
There were 546 valid answers from the total number of questionnaires, with five being excluded f
or lack of information.
The Questionnaire

The questionnaire was divided into two parts. Part A had a set
of tax case scenarios designed to analyze the tax compliance behavior of the respondents.
After studying each scenario, the participants were required to rate on a seven-
point likert scale about,whether or not they would reveal their earnings in a similar circu
mstance. The first section of the survey consisted of four questions. Question one
aims to elicit a reaction to a problem with general public evasion (GE). Question 2
asks for an answer to a general public avoidance concern.
Personal avoidance (PA) is the subject of the final question, while personal evasion (PE) i
s the subject of the third question.
In Part B, under "demographic information," participants are asked about their backgroun
d, including their gender, age, ethnicity, and parents' employment history.

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Data Analysis

Most of the questionnaires in Part A employed a Likert scale, and responders were
required to check the corresponding column. The Part B of
the questionnaire asked for a checkmark to indicate the right response.
The SPSS statistical program was used to code, input, and analyze the questionnaire results.

FINDINGS

The characteristics of the respondent and the outcomes of the hypotheses put out for this stu
dy are reported in this section.

Respondent’s Characteristics

Table 1 presents a synopsis of the respondents' attributes. The sample characteristics similarity
percentage are almost the same for both sets of questionnaires.
According to the sample characteristics, there were around 26% male respondents and 74% fema
le respondents.
Malays made up 71% of the respondents, followed by Chinese (23%), Indians (4%), and other p
eople (2%). Eighty-four percent of the responders are in the 20–30 age range.
This is as a result of the responders being pursuing undergraduate degrees.
The majority of the parents of the student (48%) work in the private sector, with only about 25%
of them employed by the government.

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Questionnaire
Question: How Do Your Taxes Get Used?
Respondents were asked to list the categories of public spending that the
taxes, duties, and social insurance contributions the people pay
cover in order to gauge the public's understanding of the relationship between tax payment and the
delivery of public services. Two steps were involved in this: First, as an open-
ended inquiry (Q1a), "Could you please explain the purpose of the taxes, duties, and social securit
y contributions paid by you?" In addition to that, they were asked how they would like their taxes
to be used.
Eight options were offered on the show-
card: Don't know, other (specify), Public Transport, Roads/Motorways, Health Services, Educatio
n, Gardaí, and Social Welfare (e.g., Pensions).
In all sections of the question, the responders did not always select the same items.
Thus, affirmative responses ought to be considered as a whole.
Figure 1 below displays the outcomes for each of the eight possibilities.
The findings demonstrate that, with nearly half (~48%) of respondents indicating health, it was the
most frequently identified unprompted area. 87% out of the
respondents overall indicated health in either part a, part b (when given a list to choose from), or b
oth.
Health is closely followed by social welfare (approximately
32% unprompted and 69% prompted, 85% cumulative) and in education (79% cumulative).
Relatively fewer respondents mentioned public transportation, with a combined percentage of less
than 70% naming these categories.

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Figure 1: Frequencies of answers to Question 1 that are weighted

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Questions 2 and 3: Have You Spoken with Revenue?

If and via what channel, they had communicated with the tax department in the previous year.
44% of the responses that were recorded said they had contacted Revenue within the previous yea
r. The channels listed in Table 1 below were used by those who had communicated with Revenue.
The respondents most frequently utilized the telephone as a means of communication.

Additionally, respondents were asked to rank how satisfied they were with Revenue's services
.
The fact that 85% of respondents expressed satisfaction or great satisfaction with the service t
hey received is a positive development.
Figures 2 and 3 below are graphs that show the answers to Questions 2 and 3.

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 Question 4: Reasons For Not Paying Taxes

At this round of the poll, the questions concentrate on looking at people's general opinions about
tax evasion.
"Tax evasion can take many forms e.g. not paying the correct amount of tax, not paying any tax
at all, etc." was the first thing the interviewer explained to the participant.
After that, respondents were asked to consider the causes of non-taxpaying individuals.
Respondents were asked to indicate whether or not they agreed with the following statements re
garding the motivations behind intentional tax avoidance.
• There's little chance of being discovered.
• Tax evasion is ingrained in Irish culture; everybody with the chance to avoid paying taxes.
• The taxes gathered are not well used
• Many believe that their current tax burden is excessive given their income.
• Many believe their pay is insufficient for the labor they perform.

To rule out the chance that any bias had occurred from the sequencing of questions, the
interviewers were asked to begin each section of the multiple-choice questions at a random
starting point. This applied to Questions 6, 7, 8, and 9 as well. The primary explanations given by
the respondents as to why some people choose not to pay their taxes are as follows: 68% of the
respondents feel they already pay too much tax; 55% believe they are underpaid for work done;
54% believe the tax collected are misused; and 51% believe there is a culture of tax evasion.

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Question 5: Perceived Risk of Getting Caught

Inquiry number five aimed to investigate the perceived danger of being discovered for tax evasi
on.
This question not only attempted to provide a broad overview of popular opinions in this area,
but also to demonstrate the effectiveness of Revenue's efforts to combat tax evasion.
The following is how the question was posed:
Those who willfully avoid paying taxes run the danger of Revenue discovering their actions an
d requesting payment in the form of interest, penalties, or even more.
How likely is it that someone who intentionally avoids paying taxes will be caught, on a scale o
f 1 to 10, where 10 is very high?

The graphs in Figure 5 below display the answers to Question 5.

The replies are slanted toward a perceived increased risk of being detected, but they are not q
uite definitive—the mode is the midpoint of the scale at 5.
This is consistent with views on the possibility of being discovered engaging in tax evasion t
hat were stated in Question 4.
This is a good answer for Revenue since it implies that people are aware of how well Revenu
e is enforcing tax compliance.
The answers to this question can be used to compare opinions on perceived risk level with ot
her survey findings, providing more information on the diverse attitudes and perceptions that
different groups of people hold.

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Question 6: Approach towards Tax Evasion

Respondents were asked to indicate whether they agreed or disagreed with a series of statements
in order to gauge opinions and attitudes regarding tax evasion.
These fall into two categories: those that deal with revenue's performance in combating tax evasi
on, and those that deal with civic responsibility and acceptability.
Thus, the data offered expands upon the answers to Questions 4 and 5.
The following are the claims that are made:
To get a sense of respondents' thoughts and attitudes on tax evasion, a series of statements were a
sked to be marked as agreed or disagreed with.
These fall into two categories: those that deal with revenue's handling of tax evasion and civic re
sponsibility and acceptability.
Thus, the data offered expands upon the answers to Questions 4 and 5.
The following are the claims that are made:
It is not acceptable in Irish culture to intentionally avoid paying taxes. People who regularly avoi
d paying taxes ought to be imprisoned. Whether the tax department
has been successful in curbing tax evasion during the last five years.
The likelihood that citizens will attempt to evade paying their taxes decreases with Revenue's lev
el of success in prosecuting tax evaders.

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• There has been a rise in intentional tax evasion.

• Assessee must consider it as civic duty to pay the appropriate taxes.

• Willful tax evasion is a low-level offense.
• Revenue has the ability to identify individuals who are underpaying taxes.
• Not many people give Revenue their whole income.

Below mentioned graphs that display the answers to Question 6.

Once more, Revenue has largely positive effects.
Tax evasion is not acceptable, according to the majority of respondents (56%), and those who en
gage in it should be sentenced to jail (55%). Additionally, 61% of respondents believe that the
taxauthorities have been successful in combating tax evasion in the past five years, to
deter tax evasion, and 35% believe that it has decreased. Finally, 60% of respondents believe that
Revenue can identify tax evaders. Very few people give Revenue their whole income report.
This demonstrates unequivocally the disconnect between the general population's personal attitu
des and how they perceive the attitudes and actions of others.

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Question 7: Moral Questions

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 In order to gauge public opinion regarding the acceptability or unacceptability of different compli
ance behaviors, such as tax evasion, this question was asked.
This is justified by putting views toward tax evasion in relation to other civic duties and behaviors
Similar polls in other nations have completed this kind of evaluation.
The following were the demonstrated compliance behaviors:
• To avail reliefs to which you are not entitled.
• Using public transportation without a valid ticket, such as buses, trains, LUAS, or DART
• To knowingly fail to pay the taxes that are due.
• To purchase services with the knowledge that the revenue from them won't have been
reported to the IRS.
• To own a TV at home without a current television license.
• Willfully requesting social benefits that you are not eligible for
• To use legal loopholes to legitimately avoid paying taxes.
• To purchase stolen things on purpose.
• To purposefully purchase fake things, such as apparel and purses.
• To buy items from outside and, if the value exceeds the limit, bring them into Ireland with
out declaring them to customs.
• Declaring a portion of your income for tax purposes, but not all of it.
• To leave trash on the pavement.

Not so much for the answers that were predicted— that is, on the statements on
which the respondents deviated —that is, regarding the intriguing responses to this question—
whether a majority of respondents agree that a particular activity is inappropriate.
The percentage of respondents who believe that intentional welfare fraud is totally undesirable (~8
0%) is significantly higher than the percentage who believe that tax evasion or fraudulent tax credi
ts or reliefs is totally objectionable (~60%).
On the other hand, it is considered more acceptable to buy pirated goods or services being aware
of the fact that the profits shall remain
undisclosed than to buy stolen goods or even merely to leave trash on the streets.
There may be some misunderstanding regarding the differences between tax evasion and avoidanc
e, even though 20% of respondents think it is acceptable. This will be further investigated in multi
variate analyses; early research indicates that responses to statements about tax avoidance varied d
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epending on demographic factors like gender, class, and education.
Remarkably, a sizable segment of participants (27%) expressed that buying items from overseas th
at over the value threshold and failing to declare them to customs is permissible.
This suggests that these respondents' actual behavior is reflected in it.

The answers to this question and the prior one about the high/low risk of being discovered will be
correlated, which could provide some intriguing insights.
Below are graphs that show the answers to Question 7.

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Question 8: Morality in Taxation

 Continuing from Question 7, respondents were questioned regarding the acceptability of

actions that had a stronger tax and compliance focus.
Since the behaviors shown (enumerated below) combined tax avoidance and evasion, it i
s possible to compare opinions about the two types of behavior.
• Inflating business costs in order to pay less in personal taxes.
• Setting up intricate financial plans to reduce or perhaps eliminate your tax liability.
• Making use of legal loopholes to reduce or completely avoid paying taxes.
• Underreporting all of your income in an effort to lower your tax liability.
• Paying employees without properly withholding and contributing to EPF &ESI.
• Failing to disclose all rental income.
• PAYE taxpayers who fail to disclose all income they receive from side gigs.

The responses show a few intriguing trends.

Only two behaviors were considered completely undesirable by the majority of responde
nts: paying employees without deducting and paying the required EPF and ESI contribut
ions (approx. 71%), and failing to declare all rental property revenue (approx. 59%).
Some types of tax evasion are viewed as less objectionable, such as underreporting, infla
ting costs, and failing to declare part-time employment.
Nonetheless, between 40% and 50% of respondents thought these actions were complete
ly inappropriate.
This is similar to the answers given about legal avoidance, which include employing intr
icate plans and loopholes to lower tax obligations (40% to 45%).
Twenty percent of respondents said it was appropriate to use intricate arrangements and/
or loopholes.
Twelve percent of respondents said it was appropriate for PAYE employees to withhold
their side income from reporting. Figures 8.1-
8.9, the graphs displaying the answers to Question 8, are displayed below.

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Question 9: Individual Reasons for Filing Tax Returns.

At this juncture, the focus shifts to the respondents' individual behaviors with regard to compl
iance. In order to determine what personally drives respondents to pay their taxes in
time, a number of pertinent criteria were requested to be rated.
The following were the factors that Revenue's compliance efforts and civic responsibilities m
ade up of:
 Fear of penalties and prosecution regarding tax matters;
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  To comply with the regulations.
 Confidence in the honesty of other taxpayers' declarations and payments.
 Fear that if you pay your taxes after the deadline, interest may be assessed.
 Being aware that Revenue may obtain specific information about you from other parties
(such as income, interest, or dividends).
 Fear that you'll face legal action.
 In most cases, Revenue will acknowledge that your claim or return is accurate.
 Apprehension that Revenue will audit you.
 Revenue simplifies the tax payment process for you.
 There is no way for you to avoid paying earnings taxes.
Bimodal factors, non-
influential factors, very influential factors, and mildly influential factors are the four major groups
into which response patterns can be divided. Strong outcomes include
adherence to the law and an individual sense of what is the right thing to do.
Another significant impact seems to be the fact that many respondents had no choice but to pay ta
x on their income.
Given that the answers to a number of statements were pretty evenly distributed across the range o
f responses, it suggests that the factor is sought to have some influence.

Bimodal responses consist of two independent components that have varying degrees of margina
l and moderate influence.
This includes worries that Revenue may get in touch with you with your tax matters, that you ma
y incur interest fees for paying taxes beyond the deadline, that Revenue may obtain specific infor
mation about you from outside sources, and that you may face legal action.
These results might be a reflection of the differences of the population, as many of the factors mi
ght not seem particularly relevant to some of the respondents
because they either don't engage in economic activities where there is a chance of evasion (only i
ncome, pensioners, or homemakers) or because they comply due to inherent compliance.
These qualities might seem to have little bearing at first, but that could be because they are pertin
ent to the respondents under consideration.
Even in the case that they engage in avoidance, it's probable that some respondents feel there is li

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ttle chance these repercussions will materialize (Q4 and 5).
We'll be doing further multivariate studies, which could provide more information on how the pu
blic views individual motivations and population variations.

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Question 10: Income Tax Returns /Relief Forms

Participants in the study were questionned if they had ever furnished

a tax return or relief form, in keeping with the focus on individual activity.
63% of respondents said they had, while 37% said they hadn't, both in absolute and weighted term
s.
The responses to this question can be grouped according to how they have interacted with Revenu
e.
The participants were asked if they thought filling out Revenue paper forms and Revenue online f
orms was easy after giving an affirmative response.
The findings show that roughly 62% of respondents said that filing paper taxes was simple.
However, many respondents were unaware of how simple it is to fill out Revenue's online forms; i
t appears that respondents prefer to utilize paper forms. Figures 10.1 and 10.2, the results-
presenting graphs, are below.

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Question 11: To what extent do you consider yourself aware of tax matters?
Question aimed at finding out how much people in
general knew about their tax status and entitlements. Figure 11 is a graph that displays the results.
Despite the mode being "quite well informed," the distribution of the data is generally bimodal.
To determine whether the answers are related to demographic characteristics and answers to other
questions, the results of this question will be utilized for further analysis.
The fact that more than 60% of respondents said they were uninformed or noncommittal could pre
sent Revenue with some issues in terms of taxpayer education.

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CONCLUSION:

We can now, after all of this detailed discussion, conclude that in order to lower the frequency o
f crimes committed by people who we think are innocent but aren't legally authorized to be, our
country needs a stronger legal system in addition to better laws and regulations.
As we've already covered, there are a lot of ways that people try to avoid paying taxes, and these
ways are so complicated that the government can't completely forbid them.

Tax-
related crimes are like a fatal disease that steadily eats up the country's revenue and is hard for i
ncompetent laws to eradicate.
In a similar vein, citizens are crucial since crimes may be readily stopped and destroyed if they
are aware of them and value the laws and government.
It's a curse that encourages the growth of illicit money.
As everyone is aware, such crimes cannot be completely eradicated in a short amount of time; n
evertheless, their frequency may be decreased by merely improving the efficiency of the govern
ment system and expanding the number of organizations that eventually work toward the reduct
ion of tax fraud and related crimes.
We have an obligation to assist the government by adhering to tax procedures and making timely
tax payments since we are aware of the detrimental effects of tax evasion.
Rather of waiting for things to change, let's be the ones to create the changes. By just doing our
jobs on time, we can make a big difference. If we all speak the same language, there won't be
much opportunity for any group or authority to take advantage of us.
But the study also made clear that the effectiveness and efficiency of tax administration have a
role in the relationship between development and tax income, in addition to the quantity collected.
Obstacles to achieving this goal

The research also looked at the effects of personal income tax evasion and found that both govern
ment revenue and socioeconomic development were negatively impacted.
Income disparity is made worse by tax evasion, which also erodes governance and lowers the amo
unt of money available for investments and public services.
The study found that there are conflicting effects of tax avoidance on development.
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Excessive or active tax avoidance, particularly by multinational firms, can lower government reve
nue even while it can stimulate investments and economic activity.
These results make it clear that a sound tax system that is efficiently managed is essential to the ec
onomy's ability to grow sustainably.
Unlocking the full potential of tax revenue requires addressing challenges like tax avoidance, tax e
vasion, and corruption.
To promote a culture of tax compliance, policy initiatives like increased tax enforcement, better co
mpliance systems, and public awareness campaigns should be put into place.

Discussion of the findings:

Investigate the relationship between tax revenue and economic development

Several significant findings were obtained from the examination of the relationship between tax re
venue and economic development.
First off, there is a favorable correlation between tax revenue and economic advancement.
This outcome is in line with widely accepted economic theory, which maintains that tax revenue is
required to fund public services, infrastructure, and social programs that promote economic growt
h.
The study finds that when tax revenues increase, governments have more money to spend on infra
structure, healthcare, education, and other important sectors.
As a result, this investment may improve overall economic well-
being, productivity, and human capital. Furthermore, a well-thought-
out tax structure can promote fairness and reduce income inequality, two other benefits that are ne
cessary for sustained economic expansion.
But it's crucial to keep in mind that tax revenue and economic growth are dependent on more than
just the level of taxes collected; they also depend on how well taxes are administered.
The research made clear that problems with tax avoidance, evasion, and corruption in the tax colle
ction system can impede the beneficial effects of tax income on growth.
All things considered, this study emphasizes how crucial a well-thought-
out and efficiently run tax structure is to long-term economic growth.
It also implies that actions to resolve tax-
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related issues that may prevent this potential from being realized are necessary.

Examination on how evasion of personal income taxes affects socioeconomic growth.

The investigation of the relationship between personal income tax evasion and socioeconomic dev
elopment produced a number of significant findings.
First off, it has been shown that evading personal income taxes harms government coffers as well
as socioeconomic advancement.
Tax avoidance by people and companies lowers the funds available for investments and public ser
vices, both of which are crucial for development.
According to the report, tax cheating makes wealth redistribution more difficult and exacerbates e
conomic disparity.
While the onus of paying for public services rests on compliant taxpayers, high-
income earners who avoid taxes profit disproportionately from their actions, which can result in so
cial and economic inequities.

The study also discovered a link between avoidance of personal income taxes and bad governan
ce.
The efficacy of the tax system is diminished when tax evasion is widespread because it fosters a
culture of noncompliance and undermines public confidence in government institutions.
The study suggested a combination of policy measures, such as increased tax enforcement, impr
oved compliance mechanisms, and public awareness campaigns to build a culture of tax complia
nce, to minimize the detrimental consequences of personal income tax evasion on socio-
economic growth.

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