Abstract

Tax evasion and tax avoidance are serious issues that negatively impact India's economic growth. Because of these problems, the government is less able to collect taxes, which limits its ability to fund public spending that is necessary for economic growth. Tax avoidance is the use of legal methods to lower tax obligations, whereas tax evasion is the wilful failure to pay taxes or the underreporting of taxes. Government revenue, investment, and economic growth are all negatively impacted by these activities. The study examines how these behaviours affect important economic metrics including GDP growth, investment, and government revenue using secondary data from multiple sources. The results show that tax avoidance and evasion have a major detrimental effect on economic growth. Because tax evasion lowers government revenue, there are fewer public funds available for investments in vital areas like infrastructure, healthcare, and education. On the other hand, tax evasion discourages foreign investment and skews resource allocation, which slows down economic growth overall. The study emphasizes how tax fraud and avoidance have a major detrimental effect on India's economic growth. In order to encourage sustainable economic development in India, it offers evidence in favour of the adoption of effective policies to counteract these behaviours.

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