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What may a business face if it does not follow tax laws?

Answer and explanation

Correct answer: Penalty or interest

The governing concept is legal compliance within the business environment. Tax laws require eligible businesses to calculate, report, and pay the applicable tax within the prescribed time. Failure to comply can lead to interest on late payment, monetary penalties, notices, audits, or other legal action, depending on the nature of the default. Hence option D is correct: penalty or interest is a realistic consequence of ignoring tax requirements. Customer happiness, machine upgradation, and improvement in weather are not legal consequences of tax non-compliance. They do not follow from the relationship between the business and the tax authority. The phrase “does not follow tax laws” clearly signals a violation of the legal environment.

Related tags

Business-EnvironmentLegal-EnvironmentTax-ComplianceClass-12Legal EnvironmentBusiness EnvironmentBusiness StudiesClass 12 Mcq

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