Tax Reforms

What is Sheltering of Taxes?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Tax Sheltering

Mains level : Not Much

This newscard is an excerpt from an original article published in TH.

We can expect a statement based question comparing Tax Shelters and Tax Heavens.

What is a Tax Shelter?

  • A tax shelter is a financial vehicle that an individual can use to help them lower their tax obligation and, thus, keep more of their money.
  • It is a legal way for individuals to “stash” their money and avoid getting it taxed.
  • A tax shelter is entirely different from a tax haven because the latter exists outside the country and its legality can, at times, be questionable.
  • A tax shelter, on the other hand, is entirely legal and keeps all monies within an individual’s home country.
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