Deemed accumulated income
[Section-343 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 343(1) of Income Tax Act 2025
343(1) The regular income, as reduced by the application of income and accumulated income under section 342, to the extent of 15% of regular income, shall be considered as deemed accumulated income and shall be invested or deposited in any of the modes permitted under section 350.
Section 343(2) of Income Tax Act 2025
343(2) The deemed accumulated income under this section shall not be considered as accumulated income for the purposes of section 342.
FAQs on Section 343 of Income Tax Act 2025
What is deemed accumulated income under the Income Tax Act, 2025?
Deemed accumulated income refers to 15% of the regular income, reduced by the application of income and accumulated income under Section 342, and is required to be invested or deposited in the specified modes under Section 350.
How is the 15% deemed accumulated income calculated?
It is calculated as 15% of the regular income remaining after subtracting the income applied and accumulated under Section 342.
Is deemed accumulated income the same as accumulated income?
No, deemed accumulated income under Section 343(2) is specifically not treated as accumulated income for the purposes of Section 342.
What should be done with the deemed accumulated income?
It must be invested or deposited in the prescribed modes specified in Section 350 of the Act.
Does deemed accumulated income affect the accumulation limits under Section 342?
No, since Section 343(2) clearly states that deemed accumulated income is not considered accumulated income for Section 342 purposes.
Why is only 15% of regular income treated as deemed accumulated income?
The Act permits 15% of regular income to be retained without immediate application, categorizing it as deemed accumulated income, to provide operational flexibility while ensuring compliance with investment norms under Section 350.
When does Section 343 become applicable?
Section 343 becomes effective from the assessment year starting on 1st April 2026.
Can an entity retain more than 15% of regular income as deemed accumulated income?
No, only up to 15% of regular income (after application and permitted accumulation) can be treated as deemed accumulated income.
What are the consequences of not investing deemed accumulated income as per Section 350?
Failure to invest or deposit the deemed accumulated income in accordance with Section 350 may lead to disqualification of the income retention and possible tax implications, though exact penalties would depend on related provisions.
Does deemed accumulated income have to be separately reported?
Yes, for compliance and audit purposes, deemed accumulated income should be separately identified and reported to ensure it is not confused with accumulated income under Section 342.
Refresh Page