Tax Deductions for Disabled Individuals

In India, an estimated 70 million people are differently-abled. Taking care of them is not only an emotional toll on the family members, but also a significant amount is spent on the medical care and nursing of such family members.

Section 80DD, Section 80DDB & Section 80U are the respective sections in the Income Tax Act which allows for tax deduction for maintenance and benefit of disabled persons. Let us check out these provisions in finer details. This is our contribution to create awareness about these tax benefits, so that those who are eligible are able to claim the same and reduce their tax liability.

Diseases Eligible for Deductions Under Section 80DD

Under this section, you can claim a deduction if you’re responsible for medical treatment of a family member suffering from a specified illness or disease. For getting this deduction, you have to meet the following conditions:

• You have to be a resident of India (this deduction is not available to non-residents)

• You are an individual or a Hindu undivided family (HUF)

• You have made expenditure under any or both of the two options mentioned below:

For the above purpose, a “disabled dependent” is a person who satisfies the following conditions:

1. In case of Individual, ‘dependent’ could refer to the spouse, children, parents and brothers and sisters. In case of HUF, ‘dependent’ refers to any member of the HUF

2. Disability should be not less than 40 percent.

3. Such person should be wholly or mainly dependent upon such Individual or HUF for support and maintenance and has not claimed any deduction under section 80U in computing his total income

Diseases specified under Section 80DD

A deduction can be claimed under section 80DD, if a person suffers from any of the following disabilities:

1. Blindness

2. Low vision

3. Leprosy cured

4. Hearing impairment

5. Locomotor disability (related to bones, joints etc. leading to restriction in movement)

6. Mental retardation

7. Mental Illness (disorders other than retardation)

8. Autism

9. Cerebral Palsy

Amount of deduction

This section allows you to claim a ‘fixed’ deduction irrespective of the actual amount incurred or deposited under Option 1/ Option 2. Deduction depends upon the extent of disability (as certified by the physician) as follows:

• Disability is less than 40 percent - No deduction

• Disability is more than 40 percent but up to 80 percent - Rs. 75,000

• Disability is more than 80 percent - Rs. 1,25,000

Certification Required

You would have to procure a copy of the certificate issued by the medical authority. There is a prescribed format for the same (Form 10 IA), which can be downloaded from the Income Tax Department’s website. Certificate has to be signed by one of the following:

• A Neurologist having a degree of Doctor of Medicine (MD) in Neurology (or in case of a child, a Paediatric Neurologist having an equivalent degree)

• A Civil Surgeon or Chief Medical Officer (CMO) of a government hospital

Section 80DDB

Under this section, you can claim a deduction for medical treatment for yourself or you family member, suffering from certain neurological and other diseases.

Conditions for claiming a deduction

1. You should be a resident of India and individual/HUF

2. The medical treatment is done for yourself or your wholly/mainly dependent husband/wife, children, parents, brothers and sisters. If you are an HUF, expenditure could be done for any dependent member of the family.

3. You should have actually paid any amount for the medical treatment for specified diseases, where the disability level has been certified to be of 40 percent and above

Diseases specified under Section 80DDB

Following diseases have been specified under the section:

1. Dementia
2. Dystonia Musculorum Deformans
3. Motor Neuron Disease
4. Ataxia
5. Chorea
6. Hemiballismus
7. Aphasia
8. Parkinsons Disease
9. Malignant Cancers
10. Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)
11. Chronic Renal failure
12. Hematological disorders
13. Hemophilia
14. Thalassaemia

Amount of deduction

• Where person is a non-senior citizen (i.e. less than 60 years): Rs, 40,000 or the amount actually paid, whichever is lower.

• Where person is a senior citizen (i.e. 60-80 years): Rs, 60,000 or the amount actually paid, whichever is lower.

• Where person is a non-senior citizen (i.e. greater than 80 years): Rs. 80,000 or the amount actually paid, whichever is lower. Important note: Deduction eligible under this section shall be reduced by amount received, under insurance from an insurer, or reimbursed by an employer.

Certification required

The person issuing the certificate depends upon the type of disease, as per Rule 11DD of Income Tax Rules. The following specialists can give the certificate:

Important note: Earlier, a certificate from a specialist working in a Government hospital was required. However as per the recent amendment to rule 11DD on October 14, 2015, the specialist can be anyone and not necessarily from a Government hospital. Certificate has to be in the Form 10IA, same as for Section 80DD.

Section 80U

The provisions of Section 80U are similar to Section 80DD; the only difference is that in Section 80DD, assessee’s family member is a person with disability and the assessee spends for her medical treatment, whereas in case of Section 80U, the taxpayer himself or herself has to be a person with disability to claim a deduction.

Also note that Section 80U applies only to an individual, not to an HUF. Rest of the provisions remain the same. Another important thing to be note is that if an individual claims deduction under section 80U, his relative or family member cannot claim deduction under Section 80DDB.

Also Read: Health Insurance for the Disabled

Conclusion

Nothing can eliminate the pain of the family with an autistic child, or a family member suffering from schizophrenia. Having said that, given the medical costs of treatment rising each day, these tax deductions do provide some relief by way of tax savings. Also, it is especially important for these families that the healthy members cover themselves through the right medical insurance so that the medical costs do not jeopardize their financial well being.