The Indian Income Tax Act provides numerous provisions and deductions to ensure that individuals with specific needs or responsibilities receive financial support. One such provision is Section 80DD, which offers relief to taxpayers who have dependants with disabilities. This section aims to alleviate the financial burden on individuals caring for disabled family members by providing deductions on the expenses incurred for their medical treatment and rehabilitation. In this article, we will delve into the details of Section 80DD and explore the eligibility criteria, allowable deductions, and other pertinent aspects.
What is Section 80DD of Income Tax Act?
Section 80DD of the Income Tax Act offers financial relief to individuals or Hindu Undivided Families (HUFs) who are supporting a dependent with a disability. This section allows a fixed tax deduction, regardless of how much you actually spend on the dependent’s care. It recognises the high costs often involved in medical treatment, training, or rehabilitation of disabled dependents, which can be a heavy financial burden. The purpose of this section is to ease that burden and offer some stability to families who are responsible for the care of a disabled member.
What is Section 80DD medical expenditure?
Taxpayers may claim a deduction under Section 80DD for the following:
- Any amount spent on the medical treatment, training, or rehabilitation of a dependent family member with a disability.
- Any amount paid or deposited into a scheme created by the Life Insurance Corporation (LIC) or any other approved insurer or administrator. These schemes must be approved by the Income Tax Department and should be specifically intended for the long-term care and maintenance of a disabled dependent.
This section is designed to offer financial support for both direct medical expenses and contributions to approved care schemes.
Eligibility for claiming deductions under Section 80DD
To be eligible for claiming deductions under Section 80DD of the Income Tax Act in India, taxpayers must meet specific criteria. Here is a summary of the key eligibility conditions:
- Taxpayer type: Individuals and Hindu Undivided Families (HUFs) are eligible to claim deductions under Section 80DD.
- Dependant with disability: The taxpayer must have a dependant with a disability. The term "dependent" refers to a spouse, children, parents, brothers, or sisters of the taxpayer.
- Certified disability: The disabled person must suffer from at least 40% of any of the specified disabilities mentioned in the Act. The disabilities include blindness, low vision, leprosy-cured, hearing impairment, locomotion disability, mental retardation, or mental illness.
- Residential status: The taxpayer should be a resident of India to be eligible for deductions under Section 80DD.
- Medical certification: To claim the deduction, the taxpayer needs to obtain a certificate in the prescribed form (Form 10-IA) from a medical authority. This certificate should specify the details of the disability and its extent.
- Dependence for maintenance: The disabled dependant must be dependent on the taxpayer for maintenance. This implies that the disabled person relies on the taxpayer for financial support.
- Nature of expenses: Deductions under Section 80DD are available for expenses incurred on the medical treatment, rehabilitation, or maintenance of the dependant with a disability.
- Quantum of deduction: The deduction amount depends on the severity of the disability. For disabilities falling in the range of 40% to 80%, the maximum deduction allowed is Rs. 75,000 (as of the financial year 2023-24). For severe disabilities (more than 80%), the maximum deduction is Rs. 1,25,000.
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Who are entitled to claim deductions under Section 80DD
Section 80DD of the Income Tax Act allows individual taxpayers and Hindu Undivided Families (HUFs) to claim deductions for expenses incurred on the medical treatment, rehabilitation, or maintenance of a dependant with a disability. The eligible individuals who can claim deductions under Section 80DD include:
- Individual Taxpayers: Any resident individual who is a taxpayer can claim deductions under this section. The taxpayer may be a parent, spouse, children, brothers, or sisters of the disabled person.
- Hindu Undivided Families (HUFs): HUFs are also eligible to claim deductions under Section 80DD if they are taking care of a family member with a disability.
It is important to note that to be eligible for the deduction, the disabled person must be a dependent on the taxpayer for maintenance. The term "dependent" in this context implies that the disabled person relies on the taxpayer for financial support.
Furthermore, the disabled person must suffer from at least 40% of any of the specified disabilities, including blindness, low vision, leprosy-cured, hearing impairment, locomotion disability, mental retardation, or mental illness.
What are the disabilities under Section 80DD?
Section 80DD of the Income Tax Act provides deductions for expenses incurred on the medical treatment, rehabilitation, or maintenance of a dependant with a disability. The section specifically mentions certain disabilities for which the deductions are applicable. As per the Act, the specified disabilities include:
1. Blindness:
Complete absence of sight or visual acuity not exceeding 6/60 or 20/200 (Snellen) in the better eye with correcting lenses.
2. Low vision:
Visual acuity not exceeding 6/18 or 20/60 (Snellen) in the better eye with correcting lenses.
3. Leprosy-cured:
A person who has been cured of leprosy but is suffering from:
- Loss of sensation in hands or feet, leading to an inability to use them effectively.
- Visible and disfiguring deformities.
4. Hearing impairment:
Loss of more than 40 decibels in the better ear in the conversational range of frequencies.
5. Locomotion disability:
The disability of the bones, joints, or muscles, leading to a substantial restriction of the movement of the limbs or any form of cerebral palsy.
6. Mental retardation:
Significant intellectual or mental impairment existing concurrently with an inability to perform activities of daily living.
7. Mental illness:
Any mental disorder other than mental retardation.
It is important to note that the specified disabilities should be certified by a medical authority in the prescribed form for the purpose of claiming deductions under Section 80DD. The severity of the disability, as certified by the medical authority, determines the quantum of deduction that can be claimed by the taxpayer. The deductions are subject to specific limits based on whether the disability is less severe (40% to 80%) or severe (more than 80%).
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