TaxFinancial Glossary
Deemed Income
Definition
Income that is treated as taxable by the Income Tax Act even though you may not have actually received it as cash. Examples include notional rent on a second self-occupied property, clubbing of minor child's income above Rs 1,500, and capital gains on property sold below stamp duty value.
Why It Matters
Many Indians do not realize that owning two or more properties triggers deemed rental income on the additional properties, even if they are vacant. This phantom income is added to your taxable income and can push you into a higher tax bracket. Proper tax planning requires accounting for deemed income.