Income Tax Deductions For A Disabled Person

What is Section 80U?

Section 80U of the Income Tax Act, 1961 allows any eligible individual to claim tax deductions if they suffer from disabilities. The disability should be certified by an approved medical practitioner at any time during the financial year. The deduction under Section 80U decreases taxable income, offering tax relief to individuals battling disability.

Disabled person: Who can claim benefits?

Section 80U of the Income Tax Act, 1961, gives a tax deduction to a person with disability: The provisions of the section highlight information on the severity of the disability and who can claim benefits under this section1.

1. Should be a resident of India.
2. Any Indian resident who has a valid medical certificate issued by a competent medical authority certifying their disability.
3. A person with disability is defined as an individual who has at least 40% disability as per their medical certificate.
4. To claim severe disability, an individual should have 80% or higher disability according to their medical certificate. These disabilities include cerebral palsy, autism, etc.
    

Which Disabilities are Qualified for Income Tax Deductions under Section 80U?

Section 80U of the Income Tax Act, 1961, lists a number of health conditions which would be termed as disabilities and are eligible for exemptions under Income Tax Deductions under Section 80U. The scope of disability under Section 80U includes the following:

1. Minimal Vision

   Minimal Vision refers to permanent visual impairment but not total blindness. Individuals with this condition can use their eyes with the help of visual aids, specialised devices, or adaptive techniques. It affects the mobility, reading, and recognition, but enables the individual to use their eyes for some functional use.

   
   

2. Hearing Loss

   Hearing loss refers to a complete or significant loss of hearing, usually at or above 60 decibels. It can cause challenges in learning, communication, and social interaction. This classification highlights the need for support and necessary accommodations to address these difficulties.

   
   

3. Complete Blindness

   Complete blindness is a condition which results in a complete loss of eyesight or where the field of vision is limited by an angle of 20 degrees or worse, or visual acuity is less than 6160 Snellen after using corrective lenses.

   
   

4. Cured Leprosy

   Cured Leprosy refers to people who have already recovered from the ailment of leprosy but suffer lasting physical damage or deformities to their eyes or limbs. The classification also applies to elderly individuals and those with severe deformities hampering their involvement in gainful occupations, emphasising the long-term challenges of leprosy.

   
   

5. Locomotor Disability

   Locomotor disability refers to a disability in bones or joint muscles which severely restricts limb movements. It also includes any form of cerebral palsy.

   
   

6. Mental retardation

   This is a condition in which individuals have incomplete or arrested development of mental capacities which results in subnormal intelligence levels.

   
   

7. Mental Illness

   All other forms of mental disorders, excluding mental retardation, fall under this category.

   
   

8. Severe Disability

   In addition to the abovementioned disabilities, Section 80U of the Income Tax Act includes severe disability for individuals having 80% or more of one or more disabilities. The limit of tax deduction for severe disability varies and is higher than for individuals with a lower level of disability. Disabilities such as autism and cerebral palsy are a part of this category.

   
   

Tax exemptions under section 80U

In addition to defining who can claim deductions under this section, section 80U also says that to claim deductions under this section, the taxpayer must have at least 40% disability. These deductions are allowed for expenses incurred on medical and maintenance needs of the taxpayer. Here’s the quantum of tax deductions allowed under this section:

• Upto ₹75,000 for a person with disability.
• Upto ₹1,25,000 for a person with severe disability.
   

Tax exemptions under section 80DD

Under section 80DD of the Income Tax Act, any individual who is a resident of India or HUF can claim deductions for their disabled dependents. These deductions are applicable if a taxpayer deposits a specified amount as an insurance premium for taking care of his/her dependent disabled person. insurance premium. Similar to section 80U, under this section also, the dependent must have at least 40% disability and the quantum of tax deductions allowed are:

• Upto ₹75,000 for a person with disability.
• Upto ₹1,25,000 for severe disability.
   

What documents are required to claim deductions under Section 80U?

The following documents1 are required to claim deductions under 80U of the Income Tax Act, 1961:

Valid disability certificate issued by a recognised medical authority in the format specified in Form 10-IA- It is the disability certificate can be obtained from a neurologist with a Doctor of Medicine (MD) in Neurology (in the case of children, a pediatric neurologist with an equivalent degree) or a civil surgeon or Chief Medical Officer in a government hospital.

Difference between section 80U and section 80DD?

Section 80U and Section 80DD are both meant to make deductions for disabled individuals. The major difference between them is that Section 80U is for the taxpayer, who is an individual with disability. On the other hand, Section 80DD exemptions are for taxpayers who are taking care of a dependent with a disability. This includes if the taxpayer is paying the medical expenses or the insurance premium for a dependent, which could be their parents, spouse, siblings, children or a member of the HUF (Hindu Undivided Family).

Simply put, if someone is bearing the expenses for their dependent family members, they can claim tax benefits under section 80DD. However, you will not be able to take the tax benefits under section 80U. Also, note that both deductions are not to be claimed at the same expense. If you are suffering from a disability and are claiming a deduction under 80U, then your caretaker can not get tax benefits under 80DD for your caretaking.

How do you claim tax deductions for disabled people?

Any person who meets the eligibility criteria as discussed above can claim deductions under the Income Tax Act. However, it is important that you be aware of the required deduction process documents, etc., to avoid any hassle.

Here’s everything you need to know about claiming tax deductions for disabled people:

1. You need to provide a medical certificate issued by a recognized medical authority to prove disability in form 10-IA with the income tax returns as per Section 139 for the relevant Assessment Year. If the certificate expires in that particular year then for that year the deduction can be claimed and for next year the certificate should be renewed.
2. You can obtain a medical certificate from any medical authority that comes under either of the following:
   • Neurologist with a Doctor of Medicine (MD) in Neurology,
   • Civil surgeon in a government hospital
   • In case of disabled children, a pediatric neurologist who has a degree of MD (Doctor of Medicine) in Neurology
   • Chief Medical Officer in a government hospital.
3. If the disability is temporary and requires reassessment, then the validity of the certificate starts from the assessment year relevant to the financial year in which it was issued and ends during the assessment year relevant to the financial year when the certificate expires.
4. If a disability certificate in form 10-IA has been submitted, there is no need to provide any proof of expense such as bills etc incurred for medical or maintenance needs of the disabled person to claim tax deductions under section 80U of the Income Tax Act.
    

Key Takeaways

1. Section 80U covers a wide range of disabilities, including minimal vision, hearing loss, complete blindness, cured leprosy, motor disability, intellectual disability, mental illness and severe disability, amongst others¹.
2. Tax Deduction for Disabled Individuals under Section 80U is available only under the old tax regime¹.
3. To claim a deduction, the disability should be covered under Section 80U, and the percentage of disability should be at least 40% or more².
4. The disability certificate should be certified by a medical authority authorised by the central or state government, and the certificate should be valid for the year of making the claim¹.
5. The deduction is fixed- ₹75,000 for individuals with disabilities and ₹1,25,000 for those with severe disabilities¹.
    

Conclusion

A disabled person has been provided with certain special tax deductions and exemptions under the Income Tax Act to ensure a financial safety net. Remember that to claim these benefits, an individual must first meet the eligibility criteria.

FAQs

1. Which section of the Income Tax Act talks about tax deductions for disabled people?

   Sections 80DD and 80U of the Income Tax Act deal with provisions for tax exemptions and deductions for disabled people.

   
   

2. Who is a disabled person?

   To claim tax deductions under the Income Tax Act, a disabled person is any individual who has at least 40% disability according to their medical certificate issued by a competent medical authority.

   
   

3. Is it mandatory to provide form 10-IA to claim deductions under section 80U?

   Yes, it is mandatory to provide form 10-IA to claim deductions under Section 80U, as it is documentary proof of a person’s disability.

   
   

4. Can both Section 80U and 80DD be claimed together?

   Yes you can claim both Sections 80U and 80DD together, If you are disabled and you also have a dependent with a disability. However, if you claim a deduction for the dependent under 80DD, the dependent would not be able to claim a deduction under Section 80U.

   
   

5. What is the maximum deduction available for disabled persons?

   The maximum deduction available for disabled persons is ₹75,000 for a person with disability and ₹1,25,000 for a person with severe disability¹.

   
   

6. Do NRIs qualify for disability deductions in India?

   No, only resident individuals1 can claim deductions under Section 80U, and NRIs do not qualify for disability deductions in India.

   
   

7. Is a medical certificate mandatory for every claim?

   Yes, a valid medical certificate is mandatory1 for every claim under Section 80U. The medical certificate must be valid for the year of claim. A fresh certificate would be required if it has expired.

   
   

8. Can parents claim a deduction for a disabled child if the child is earning?

   If the child is earning and has a taxable income, parents cannot claim a deduction for the disability.

   
   

Source:

 

1. https://cleartax.in/s/section-80u-deduction
2. https://tax2win.in/guide/income-tax-deduction-under-section-80u