A taxpayer legally arranges transactions to reduce tax without concealing income or falsifying records. What is this conduct called?
Correct answer: C. Tax avoidance
- A. Tax assessment
- B. Tax evasion
- C. Tax avoidance
- D. Tax withholding
Explanation
Tax avoidance uses lawful provisions or planning to reduce tax liability. Tax evasion involves unlawful concealment, false statements or other deliberate violations of tax law.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Taxation
Taxation covers the principles used to assess and collect taxes from individuals, businesses and transactions, with emphasis on income tax and sales tax concepts in Pakistan. Questions involve taxable income, exemptions, deductions, tax liability, withholding, returns, assessment, tax avoidance versus evasion, and the distinction between direct and indirect taxes.
Practise Taxation
50 free Taxation MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Taxation questions
Which tax is generally classified as an indirect tax?
Which feature makes an income tax progressive?
A registered business has output sales tax of Rs. 180,000 and eligible input tax of Rs. 125,000 for a tax period. Ignoring other adjustments, what is the net sales tax payable?
For a taxpayer, what is the usual effect of an allowable business deduction?
Which item is normally treated as a capital expenditure rather than an ordinary revenue expense?
A taxpayer's gross tax liability is Rs. 95,000 and allowable tax deducted at source is Rs. 20,000. Ignoring credits and other adjustments, what amount remains payable?