There are certain sections of the Income Tax Act, 1961, which allows deductions from total gross income before the imposition of tax. Deductions are available given the expenses used to cover medical treatment of a differently-abled person. One such section is 80DD of the Income Tax Act. Want to know more about it? Read along!
What Is Section 80DD?
Section 80DD of the Income Tax Act, 1961 focuses on the deduction for the medical expenditure of a dependent with disabilities or a differently-abled person. This section also includes premium payment towards an insurance plan bought for a differently-abled person.
Who Is Eligible to Claim Deduction Under Section 80DD?
Following is a list of individuals or groups eligible for claiming tax deduction under Section 80DD –
- A resident of India who manages medical expenses of differently-abled dependents.
- Any Hindu Undivided Family (HUF) that manages medical expenses of differently-abled dependents
What Deductions Are Available Under Section 80DD?
Deductions available under Section 80DD depend on the nature of the disability. These include,
- Tax deduction of up to ₹75,000 is available for a dependent individual with a disability (more than 40% but less than 80%).
- Tax deduction of up to ₹1,25,000 is available for a dependent Individual with severe disability (80% or more). It is the maximum 80DD limit that one can claim.
These deductions are applicable on the following expenses:
- Expenditure covering medical treatment such as nursing, rehabilitation of the differently-abled dependent individual
- Amount paid towards Union Trust of India, Life Insurance Corporation Ltd or any other insurance company for purchasing specific insurance policies or schemes to take care of differently-abled dependents
Who Qualifies as Disabled Dependent to Claim Deductions Under Section 80DD?
The Persons with Disabilities Act, 1995 defines disability as stated in clause (i) of section 2. Individuals who are considered disabled persons (certified by an authorised medical authority) include those with autism, cerebral palsy, and multiple disabilities. The disability must, however, be at least 40% to qualify for a tax deduction.
Under Section 80DD, dependents (spouse, children, parents, siblings, members of HUF) are considered as spouses, children, parents, siblings, or members of the HUF.
All individuals with 40% disability (certified by an official medical authority) are considered disabled dependents (spouse, children, parents, siblings, members of HUF).
Note: Section 80DD of the Internal Revenue Code only provides for deductions for dependents of taxpayers who are disabled, not the taxpayer himself.
Under Section 80DD of the Income Tax Act, the following kinds of disabilities and severe disabilities are considered under the definition of disability as given above.
- Hearing impairment
- Mental retardation
- Locomotor disability
- Low vision
- Mental illness
- Cerebral palsy
How to Claim Deductions Under Section 80DD?
Medical certificates (issued by an official medical authority) must be submitted by individuals who wish to claim Section 80DD deductions. The taxpayer must also provide Form 10-1A, ITR papers, a self-declaration, and other required documents.
Would you like to know where to obtain a Medical Certificate for your disabled dependent?
Disabled dependents can obtain Medical Certificates from the following individuals –
- Civil surgeons or chief medical officers of government hospitals.
- An MD-qualified neurologist.
- An equivalent pediatric neurology degree (if it’s a child) or a paediatric neurology degree.
You can apply for the deductions under this section by reading the above-mentioned piece. People with disabilities are eligible for deductions under 80U; however, taxpayers who take care of dependents with disabilities are eligible for deductions under 80DD. Due to this, individuals cannot claim both tax deductions at the same time.