Tax avoidance

Tax Glossary Definition

Tax avoidance

Tax avoidance refers to arranging one’s financial affairs in a manner that takes advantage of legitimate tax rules—such as deductions, exemptions, or incentives—to reduce the overall tax payable. These strategies operate within the legal framework, although they may sometimes raise ethical questions or be perceived as overly aggressive.

Example: For instance, a company might put money into government-approved infrastructure bonds so it can claim deductions under Section 80CCF. By doing so, it lowers its taxable income and, as a result, its tax bill—entirely within the law.

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