Impact of tax evasion on indian economy

Taxation plays a critical and pivotal role in the process of advancement and growth of Indian economy. Tax evasion occurs when individuals deliberately fail to comply with their tax obligations. The resulting tax revenue loss may cause serious damage to the proper functioning of the public sector, threatening its capacity to finance its basic expenses. India has been facing major problems like tax evasion, black money; the existence of parallel economy evidences the Indian taxation system requires few major reforms in future to address all these problems. The present study covers the overview of the effectiveness of taxation laws, impact of tax evasion on Indian economy, delineating the factors responsible for tax evasion and examining the possible remedies to lessen the problem of tax evasion.