Differentiate between "Tax Evasion" and "Tax Avoidance" ? Is any one of them legal ?

Tax avoidance is an attempt to reduce the amount of tax that a taxpayer is required to pay while staying within the limits defined by law, and by fully disclosing the material information to concerned tax authorities. According to Canada Revenue Agency (CRA), when actions are taken to minimize tax without breaching law, but such actions contravene the spirit of the law, it is called tax avoidance.

Tax evasion, on the other hand, is opposite to tax avoidance. It is an evasion of tax through illegal means. Tax evasion usually involves the deliberate misrepresentation or concealment of the true nature of the affairs to reduce the overall tax liability. Individuals and corporations misrepresent their income to the tax authorities and this misrepresentation may be done by hiding money along with the interest earned on it in offshore accounts, or by underreporting the actual income earned.

tax avoidance on the other hand is perfectly legal within the ambit of the law and is the legal use of the tax system to reduce taxes.

This can take many many different forms.

Tax Avoidance

Its a legal term means, in which some countries enters into agreement like Free Trade Agreement called FTA and with this rule, an organization can reduce the amount of taxes and duties levied on the import and export of goods, like in China, Pakistan, India and some other countries FTA is applicable. For Example, if you are in Pakistan and you want import Pharmaceuticals raw material from China, the Exporter in China will issue you FTA Certificate, on basis of this FTA, the amount of duties or tax will be reduced as per prevailing rates.

Tax Evasion

Tax Evasion is the hiding of tax, booking of expenses that are not admissible, sale and purchase of goods without the levying of tax on the goods.  Expenses which are not admissible as per Tax Laws like personal nature of directors.

Nice to see good questions like that 

Agree with all 

agreed with gentlemen

Tax Evasion is the reduction or minimization of tax liability by illegal methods and  Tax Avoidance it the reduction or minimization of tax liability by lawful methods so the right answer is that the Tax Avoidance is legal.

Agreed with the answer of VENKITARAMAN KRISHNA MOORTHY VRINDAVAN  and Malik Khalid Mahmood 

Tax evasion is to neglect paying tax although you are subject to, by tax avoidance is to avoid being subject to tax like the expansion in rent expense instead of purchasing assets.

agree with mr venkitaraman 

I agree with answers provided