Q. Consider the following statements::
1.Tax avoidance is an act of using legal methods to minimize tax liability whereas Tax evasion is an illegal way to minimize tax liability.
2.Tax evasion is taking advantage of the shortcomings in the tax laws whereas Tax avoidance is deliberate manipulation in accounts.
Select the correct statements using the codes given below:

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: A
Notes:

Explanation –

Statement 1 is correct. Tax avoidance is an act of using legal methods to minimize tax liability whereas Tax evasion is an illegal way to minimize tax liability.

Statement 2 is incorrect. Tax avoidance is taking advantage of the shortcomings in the tax laws whereas Tax evasion is deliberate manipulation in accounts.

Source: The Hindu