Can somebody explain what is entry system prevalent to evade taxes?

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https://www.desidime.com/comments/permalink/10113163

Desidime User

2024-06-02

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Cannot be given in too much detail in open.

Basically cross-holdings within entities/ companies.. to 'avoid' (not 'evade') tax liabilities.

Tac avoidance is legal in India, subject to provisions. Tax evasion is a cognisable offence.

Usual entries played around with are in P&L account. Easier still to give 'loan' to related party or take loan.

Other mischief is via inventory/stock entries.. without actually moving the goods and then doing contra entry
or reversing the transactions in the next financial year.

Taking and giving entries comes at very nominal costs like the going money-market rates or the G-sec yields in the ultra short term or the medium term.

Although as per the 'entry' and its quantum, things are negotiable between the parties and could thus have slightly higher coats of rotating the funds and still keeping it white.. while shifting tax liability in a particular assessment year.

If personally/individually trying to avoid tax and one is okay converting from white to black.. then many religious/social cause charitable institutions or (semi-fale) charitable events (like music shows or so on) who get approval from the charity commissioner
take 'donation' by cheque/fund transfer or sell the tickets for the show
then return most of the funds back in cash, after adjusting for whatever book entries they would have to make for showing expenses.

There was a time when Bihar and some other states had more NGOs, religious charitable trusts than public toilets there.

If the charitable institution is like family or close to the person.. some even return all the amount in cash.
They can internally claim they fed N thousand/hundred kids two meals a day or organised XYZ spiritual leader's event (sermon, satsang, bhagwaad paath) and so paid for the same.

But unlike all this charity/ fake charity.. taking and giving entries is completely legal.
Also, everything has a proper paper trail. Hence unless someone does a Vijay Mallya on you, the money is (relatively) safe and the law can always be used to settle any issues.

https://www.desidime.com/comments/permalink/10113547

DEEPANGEORGE

2024-06-02

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cross holdings? any example

entry played in P&L account? any example

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