| Tax Planning | Tax Avoidance | Tax Evasion |
| it is method of reduce taxes by using maximum benefit of deductions, exemptions, rebates etc. for minimizing tax liability. | It is method of reduce taxes by finding out loopholes in the law. | It is method of reduce taxes by dishonest means. |
| It is fully within the framework of law. | It complies with the legal language of the law but not the spirit of the law | It is clearly violation of law and unethical in nature. |
| This concept is accepted by the Judiciary in India. | This concept can be considered heinous to tax evasion. Government brings amendment to curb such practices and to plug the loopholes | It is wholly illegal & prohibited. |
| It is within the language and spirit of law. So, penalty and prosecution can be. | penalties and prosecution can be against the person engaged in it. | stringent penalties and prosecution can be against the person engaged in it. |
| It is futuristic in nature, i.e., it aims to minimize the tax liability of the upcoming years. | It is also futuristic in nature. | It aims to evade the payment of tax after the tax has arisen. |