• Deduction is allowed for a dependant of the tax payer and not the tax payer himself.
• The taxpayer is not allowed this deduction if the dependant has claimed a deduction under section 80U for himself/herself.
• Dependant in case of an individual taxpayer means spouse, children, parents, brothers & sisters of the taxpayer. In case of an HUF means a member of the HUF.
• The taxpayer has incurred expenses for medical treatment (including nursing), training & rehabilitation of the differently abled dependant or the tax payer may have deposited in a scheme of LIC or another insurer for maintenance of the dependant
• Disability of the dependant is not less than 40%.
• Disability is as defined under section 2(i) of the Persons of Disabilities Act, 1995

When the above conditions are met amount of deduction allowed is –

• Rs 50,000 (in financial year 2014-15) where disability is more than 40% and less than 80%
• Rs 1,00,000 (in financial year 2014-15) where disability is more than 80%
• These deductions are allowed irrespective of your actual expenditure.

Do note that starting financial year 2015-16 – The deduction limit of Rs 50,000 has been raised to Rs 75,000 and Rs 1,00,000 has been raised to Rs 1,25,000.