Deemed Income

Deemed income refers to certain amounts that are treated as income under tax laws, even if they are not actual earnings in the usual sense. The law “deems” these amounts as income to ensure they are taxed appropriately.

Common examples include unexplained cash credits, investments or expenses where the source cannot be justified, or transactions where income is presumed under specific provisions of the Income Tax Act.

In simple terms, if you cannot explain the source of money or if a transaction falls under specific anti-avoidance rules, the tax authorities may treat it as income and tax it accordingly.