I have listed main differences between Tax Avoidance and Tax Evasion in Indian perspective below:
1. Tax avoidance aims at reducing tax by exploiting loopholes in tax law, while Tax evasion is escaping tax liability by illegal concealment of income, etc.
2. Tax avoidance skilfully examines legal lacunae that can help reduce tax, while Tax evasion involves blatant use of unfair practices. There is no skill here.
3. Tax avoidance is lawful in application but mala fide in intent, while Tax evasion is unlawful.
4. Tax avoidance is planning before the actual liability for tax comes into existence, while Tax evasion involves non-payment of tax after the liability of tax has arisen.