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There are certain sections under the income tax laws of India which provide tax benefits to individuals if either they or any of their family members are suffering from certain disabilities.
Section 80U offers tax benefits if an individual suffers a disability, while Section 80DD offers tax benefits if an individual taxpayer’s dependent family member(s) suffers from a disability. This article is centered around discussing the tax benefits available under Section 80U.
A resident individual who has been certified as a person with a disability by the medical authority can claim the tax benefit under Section 80U. For the purpose of this section, a person with a disability is defined as a person who has at least 40 percent disability, certified by the medical authorities.
For the purpose of this section, disability has been defined as one of the following:
The section also provides a definition for a severe disability which refers to a condition where the disability is 80 percent or more. Severe disability also includes multiple disabilities, autism and cerebral palsy.
A deduction of Rs. 75,000 is allowed for people with disabilities, and Rs. 1,25,000 deduction for people with severe disability.
There isn’t any documentation requirement apart from the certificate certifying the disability from a recognized medical authority in Form 10-IA. There’s no need of producing bills for the cost incurred for the pursuance of treatment or such other expenses.
For making the claim under this section, one must submit the medical certificate indicating the disability together with the income tax returns as per Section 139 for the relevant AY. In case the disability assessment certificate has expired, one would still be able to claim such deductions in the year in which the certificate expires. However, a fresh certificate would be required from the succeeding year for claiming the benefits u/s 80U.
Certificates could be obtained from the medical authorities who could be either, a neurologist having a degree of Doctor of Medicine (MD) in Neurology (in case of children, a pediatric neurologist having an equivalent degree) or a civil surgeon or Chief Medical Officer in a government hospital.
Note: If the disability is temporary and requires reassessment after a certain period, then the certificate’s validity starts from the assessment year relevant to the financial year during which it was issued and ends during the assessment year relevant to the financial year when the certificate expires.
Section 80DD provides tax deductions to the family members and the kin of the taxpayer with a disability, whereas Section 80U provides deductions to the individual taxpayer with a disability himself.
Section 80DD is applicable if a taxpayer deposits a specified amount as an insurance premium for taking care of his/her dependent disabled person. Under section 80DD, the deduction limits are the same as Section 80U. Here, a dependent refers to the siblings of the assessee, parents, spouse, children or a member of a Hindu Unified Family.
An individual who has a prescribed disability with 40% disability or 80% disability can claim deduction under section 80U of the Income Tax Act.
An individual or person with physical disabilities can claim the deduction under section 80U while reporting income in an income tax return.
The individual should furnish a copy of a medical certificate under section 80U along with the income tax return. The medical certificate should be based on the disability and the prescribed medical authority.
The amount of deduction available to a disabled individual is Rs 75,000. In the case of 80% disability, the deduction is Rs 1,25,000.