Tax evasion is an illegal means employed by a taxpayer in order to reduce his tax liability. This may be carried out by fraudulent or false tax, smuggling, hiding or non-declaration of incomes, claiming expenses or relief one is not entitled to, etc. The Tax Act usually states the penalties to be applied in case of evasion of tax.
Tax avoidance on the other hand is where a taxpayer uses methods to reduce tax liability but within the law. This could be done by studying the Tax Act and detecting loopholes in it to be exploited to the full advantage of the taxpayer. For example a taxpayer could operate business as a company or sole Proprietorship or partnership whichever gives the best advantage. Pressure groups could be formed to influence legislation in taxpayers favour. Note that tax avoidance (tax planning) may or may not lead to loss of revenue to the government and is not punishable.