Tax avoidance is not illegal but tax evasion is unlawful.
Tax avoidance is planning of your income in such a way so that minimum or no is tax is paid.
The planning may be related to timing of income, income heads under which it is to be received etc.
To avoid maximum tax you must read this article 10 free tax saving tips on how to save tax.
The best way to avoid tax is tax planning.
Estimate your income in the beginning of the year and take measures to claim maximum exemptions and deductions.
For example wants you are going abroad for employment so you will have to plan your stay in such a way that your residential status remains non resident and any foreign income earned during that year will be non taxable.
There are many other ways you can plan your taxes.
Always take help of your chartered Accountant.
Keep him informed of any unexpected transaction or lumpsum money received during the year.
If you are going to incur any financial transaction always keep an eye on the tax side of it.
For example if sold your house and earned capital gain (Total consideration Less indexed Purchase price) on it. You should be aware that you can claim exemption of the capital gain by investing the amount in new residential house in fixed time period.
Not earning the income is not tax avoidance, but deferring the earning for some time for tax planning purpose is tax avoidance.
Always remember that you can avoid tax by using the income tax sections for your benefits.
You will have to follow each section strictly and plan your taxes within the purview of law.
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