Question

Showing income as agricultural income is what way of tax evasion?

• A. Underreporting income
• B. Hiding money
• C. Inflating expenses
• D. Avoiding indirect taxes

Answer 1

The correct option is B Hiding money

One way of tax evasion is to transfer money illegally to the banks of other countries. These countries either have no or low taxes. The Indian government does not know about such income and hence, cannot levy tax on that money. Another way is to show income earned as agricultural income. Agricultural income is exempt from taxes. Even a rich farmer does not have to pay tax on his/her income from agriculture.