A Detailed Guide Covering Deductions Under Section 80DD

What is Section 80DD?

A resident individual or HUF (Hindu Undivided Family) can claim a deduction in taxes under Section 80DD of Income Tax Act, 1961, on medical treatment and expense on support and maintenance of a wholly dependent individual who is differently-abled or with disability.

Premium payments towards insurance plans that are specifically designed for the disabled dependent also qualify for deductions under Section 80DD.

Conditions to avail deductions under Section 80DD

The following criteria have to be met to qualify for Section 80DD deductions:

• Deduction under Section 80DD applies to the disabled or differently-abled dependent and not for self.
• If the disabled or differently-abled dependent has already claimed for deduction in taxes under Section 80U for self, then the taxpayer doesn’t qualify for tax deduction under Section 80DD.
• Family members who can qualify as a dependent of the individual taxpayer include spouse, parents, children, sisters and brothers. In HUF, any member of the HUF qualifies as a dependent.
• The deductions include expenses incurred by the taxpayer towards medical treatment, nursing, training and rehabilitation of the disabled or differently-abled dependent, or the sum paid towards the premium of the insurance policy from LIC or another registered insurer, designed specifically for the disabled or differently-abled dependent.
• The disability in the dependent should be 40% or more to qualify for deductions under Section 80DD of Income Tax Act, 1961.
• The disability should be as defined under Section 2(i) of Persons of Disabilities Act, 1995.

Eligibility for deduction under Section 80DD

• The individual or HUF should be a resident of India to claim deduction under Section 80DD.
• Non-resident individuals (NRI) do not qualify for tax deductions under Section 80DD.

Disabilities included under Section 80DD

• Disability as defined under Section 2(i) of Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995
• Disability as defined under Section 2(a)(c)(h) of National Trust for the Welfare of Person with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 are included under Section 80DD of the Income Tax Act. They are as follows:

• • Blindness
  • Low vision
  • Severe or cognitive mental disabilities
  • Hearing impairment
  • Leprosy cured
  • Locomotor disability
  • Cerebral palsy
  • Autism
  • Mental illness
  • Multiple disabilities

The disability in the person should be 40% or more to qualify under Section 80DD. Disability of 80% or more is defined as a severe disability.

Definition of the disabled dependent as per Section 80DD

The disabled person has to meet the following conditions, to be termed as a disabled dependent as per Section 80DD, which would allow their caretaker to avail tax benefits:

• The self, or, spouse, parents, children, sisters and brothers of the taxpayer are considered as a disabled dependent.
• In HUF, any member of the HUF can be considered as disabled dependent.
• The disabled dependent should be mostly or wholly dependent on the taxpayer for medical expenses, support and maintenance.
• The disabled dependent must not claim deductions for self under Section 80U of the Income Tax Act.

Who provides medical certificate certifying the disability

As per the 80DD income tax laws, a medical certificate from the following authorities qualifies for deduction claims under Section 80DD:

• Chief Medical Officer or a Civil Surgeon of a government hospital
• The neurologist with Doctor of Medicine (MD) degree in Neurology or Pediatric Neurologist with Doctor of Medicine (MD) degree in Neurology for children

Tax deduction under Section 80DD

The amount that can be claimed for tax deduction under Section 80DD depends on the severeness of the disability in the dependent. The tax deduction amount that can be claimed for deductions from the Financial Year 2015-16 onwards is as follows:

• Dependent with 40% disability or more: If a differently-abled dependent has a disability of 40% or more on any one of the included disabilities, then the taxpayer, who is part of the family of the disabled dependent and pays for their medical expenses, support and maintenance of the disabled dependent, can claim a tax benefit of up to ₹75,000 in a financial year.
• Dependent with 80% disability or more: If a differently-abled dependent has a severe disability, i.e. the disability is 80% or more, then the taxpayer, who is part of the family of the disabled dependent and pays for their medical expenses, support and maintenance of the disabled dependent, can claim a tax benefit of up to ₹1,25,000 in a financial year.

Note: Before the financial year 2015-16, the tax deduction limit for 40% disability was ₹50,000, and for 80% disability, it was ₹1,00,000.

Required documents to claim tax deduction under Section 80DD

The taxpayer has to submit the list of documents as mentioned below to claim deductions under Section 80DD of Income Tax Act, 1961:

• Medical certificate: The taxpayer has to furnish a copy of the medical certificate issued by the competent authority, as mentioned in 80DD, authenticating the nature and the intensity of the disability in the dependent.
• Form 10-IA: The taxpayer has to furnish Form 10-IA if the disabled dependent suffers from multiple disabilities, cerebral palsy or autism.
• Self-declaration certificate: The taxpayer has to furnish the self-declaration certificate, specifying the incurred expenses on medical treatment, nursing training and rehabilitation of the disabled dependent.
• Receipts of paid insurance premiums: The self-declaration form acts as a valid document to claim most of the expenses. Thus, the taxpayer doesn’t need to furnish actual receipts to claim deductions on expenses. But if the taxpayer wants to claim deductions on insurance premium payments towards the insurance policy taken specifically for the disabled dependent, then they need to furnish the actual payment receipts at the time of applying for tax benefits under Section 80DD.