Deemed sales are those which are not really "sales" but have been deemed as sales. For instance, leasing and hire purchase transaction, works contract, transfer of right to use goods are instances of deemed sales that are taxed under the Sales Tax Act.

The inclusion or otherwise of deemed sales under VAT differs from State to State. For instance, West Bengal Draft VAT Act and the Tamil Nadu draft Act specifically excludes deemed sales from the VAT chain if the goods used in the execution of works contract has been purchased from VAT registered dealers. In States where deemed sales are brought under VAT, proper rules need to be framed for grant of input tax credit.