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TAX EVASION – A MAJOR THREAT TO ECONOMIC DEVELOPMENT AND GROWTH – CAUSES AND REMEDIES
Abstract: Taxes are the major source of revenue to the government. Tax evasion is a serious threat which hampers the economic development to a greater extent as majority of the welfare measures undertaken by the government are funded by the taxes collected. Tax evasion is a scenario where people evade tax through illegal and fraudulent means. It might be in the form of understating profits, gains and turnover and overstating losses and expenses, nonpayment of taxes the tax evaders find every opportunity to evade tax. This results in a huge amount of revenue loss to the government so that the country faces economic stagnation. The economic scenario is such that these tax evaders can even buy the government with volumes of black money. Tax evasion also leads to economic inequality where the rich becomes richer and the poor becomes poorer. This is one of the major reasons for India’s poor economic growth since independence despite being very rich in natural and human resources. This review paper focuses on highlighting the causes and ill effects of tax evasion in the overall development of the Indian economy and also suggests a few measures to resolve this issue and there by paving way for the growth of the country.
Keywords: Tax evasion, economic development, economic growth, illegal, black money