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paid tax on its ine [paragraph 16, PartB, Sixth Schedule]. But where any tax payable by any partner of a firm in respect of his share of ine cannot be recovered from him, then DCT (Deputy Commissioner of Taxes) shall collect it from the firm [sec. 98]. In case of discontinued business of a firm or if the firm is dissolved, the partners are jointly and severally liable to pay due tax, if any [sec. 99]. See few other statutory issues regarding partnership firm and partners in AppendixI. A pany is taxable for its total ine always as a nonpassthrough entity. The shareholders of the pany are taxable for the ine of the entity, only if distributed to them as dividend, which is subject to a sourcetax ( 10% (u/s 54). At the time of sale/transfer of shares, the shareholder may require to pay tax on capital gain arising from the sale or transfer. Thus, shareholderlevel of tax (ts) usually includes tax on dividend distributed and tax on capital gain on sale/transfer of shares. However, capital gain on transfer of shares of a pany established under the Companies Act 1994 is subject to a reduced rate of 10% [. No. 220Ain/Aykar/2021 dated ], but the capital gain on transfer of stocks and shares of public panies listed with a stock exchange in Bangladesh is fully exempted [sec. 32(7)]. In case of a nonpassthrough entity, there is at least doublelevel taxation. First, a tax is paid by the entity and then a second tax is paid by the owners of the entity (partners of a firm or shareholders of pany). In case of firm which has duly paid its tax, double taxation is avoided by considering the share of firm?s ine as taxfree and allowing a tax rebate thereon to the partners. But in case of a pany, the pany has to pay tax on its ine at 30%, 40% or 45% and then the individual shareholders have to pay sourcetax at 10%, which will be treated as advance ine tax (AIT) and then considering the marginal tax rate of the concerned shareholders, tax rate on dividend may be up to 25% for highine taxpayers. In case of a pany investing in shares of another pany, there will be triple taxation. The pany of which shares have been purchased has to pay firstlevel tax on its ine at 30%, 40% or 45%. Then the investing pany has to pay secondlevel tax on distributed dividend at 15% and when it will distribute its ine as dividend, its individual shareholder has to pay thirdlevel tax (sourcetax and possible extra tax). TAX EVASION, TAX AVOIDANCE, AND TAX PLANNING Tax reduction strategies are often tainted with legality. Ine tax statutes have provisions for charging tax on “any ine, profits or gains, from whatever source derived” u/s 2(34)(a) and hence, according to the spirit of this provision, legality of the source may not be questioned if tax is duly paid. Suffice it to say, in the Ine Tax Ordinance, there are several sections where investment out of undisclosed ine can be legalized by paying tax at a stipulated rate not always on the invested amount and the tax rate is often very low [., specific tax rate at Taka 300 or Taka 500 or Taka 200 per square meter for investment in house property u/s 19B, % of the deed value in case of investment u/s 19BB, and 10% or 15% of the purchase value in case of investment in motor vehicle]. Ine by way of winnings from “card games and other games of any sort or from gambling or betting” referred to in section 19(13) is subject to sourcetax of 20% (u/s 55) and this tax deducted at source is a “final discharge of tax liability” u/s 82C(4). However, given these moral issues, while dealing with any sort of strategy regarding tax, we must be aware about the distinctions among tax evasion, tax avoidance and tax planning. 12 Tax Evasion Tax evasion has the objective of reduction of tax illegally. Sometimes, it is referred to as ?tax cheating” through acts of mission or omission. Deceit, concealment, and/or misrepresentation are mon elements in most illegal tax plans (Sommerfeld et al., 1980: 28/1). As stated by Webley et al. (1991: 23), “Nonpliance is a more neutral term than evasion since it does not assume that an inaccurate tax return is necessarily the result of an intention to defraud the authorities and it recognizes that inaccuracy may actually result in overpayment of taxes. … In evading tax one is knowingly breaking the law. This has social and psychological consequences such as stigma and guilt and involves confronting different costs since there is a risk of being caught and fined or sent to prison.” According to Lakhotia and Lakhotia (1998: 9), “The expression ?Tax evasion? means illegally hiding ine or concealing the particulars of ine or concealing the particular source or sources of ine or in manipulating the accounts so as to inflate the expenditure and other outgoings with a view to illegally reduce the burden of taxation. Hence, tax evasion is illegal and uhical.” Tax Avoidance Tax avoidance and tax evasion usually both have same objective of reduction of tax, but tax avoidance enpasses only legal means of achieving the objective. Justice Jagadisan J. has mentioned in the verdict of Aruna Group of Estate v. State of Madras (1965) case, “Avoidance of tax is not tax evasion and it carries no ignominy with it, for, it is sound law and, certainly, not bad morality, for anybody to so arrange his affairs as to reduce the brunt of taxation to a minimum.” (Palkhivala and Palkhivala 1976: 46). Avoidance involves ?every attempt by legal means to prevent or reduce tax liability which would otherwise be incurred, by taking advantage of some provision or lack of provision in the law … it presupposes the existence of alternatives, one of which would result in less tax than the other? (Report of the Royal Commission of Taxation 1966: 538。 (b) by deferring the claim for certain deductions from taxable prof