A Complete Overview of Section 80DD of the Income Tax Act, 1961

Shubham Chauhan

05 Dec, 2019

People with disabilities are among the most marginalised groups in the world. People with some disability have to suffer not only because of their physical condition moreover society also plays its part in discouraging these people. Financial expenses of the disabled ones and their family member also go up because of the medicinal charges. If such expenses are made taxable, it becomes difficult for the person to manage the budget in such adverse conditions. To avoid this hike in medicinal charges, Indian Law has laid down a provision in the Income-tax Act, 1961. Section 80DD of the Income Tax Act specifically deals with disabled people. The percentage of disability determines the income tax deductions provided to the relatives of the disabled.

Diseases Covered Under Section 80 DD

Diseases covered under Section 80 DD are as follows :

• Hearing impairment
• Mental retardation
• Mental illness
• Autism
• Cerebral palsy
• Blindness
• Locomotor disability
• Low vision

Medical Certificate for the disabled dependant is given by  :

• The civil surgeon or CMO of a government hospital.
• A neurologist with a Doctor of Medicine degree in Neurology. In case of a child, a Pediatric Neurologist holding the same degree gives the medical certificate.

Who Can Claim the Deduction under Section 80DD ?

An individual who belongs to a Hindu Undivided Family (HUF) and the person taking care of the disabled in the family can claim for Deduction under Section 80 DD.

Deductions made under Section 80 DD of the Income Tax Act, apply to the expenses made on medicines and other medical bills. The amount also includes the insurance premium paid to the insurance companies to cover the cost of money spent on maintenance of the disabled person.

Some considerations related to insurance premium

Not every insurance scheme qualifies for the claim of deduction under Section 80 DD. The policy should insure the life of the taxpayer and should be on his name.

The premium of the insurance should be paid annually or in a lump sum amount to benefit the dependent disabled.

The nomination of the policy should be made on the name of disabled dependent or any other person or trust that would receive the benefit of the disabled person.

Terms and Conditions for Claiming Deductions under Section 80DD

• The deduction under Section 80 DD is allowed for the disabled person and not for the benefit of the person claiming it.
• In a situation where the disabled person has already claimed the deductions, the taxpayer is not permitted to claim the benefits of deductions under Section 80 DD.
• As per this section, dependent in case of an individual taxpayer means spouse, parents, children, brothers and sisters of the taxpayer. It may also include any person under the care and protection of HUF.
• Disability of the person should be more than 40 % to be eligible for claiming deductions under Section 80 DD.
• All these deductions are given over and above the actual expenditure of the person.

Amount of deduction allowed under section 80DD

The amount of deduction allowed under section 80 DD of the Income Tax Act depends upon the severity of the disability.

The family of a person with a disability percentage above 40 but less than 80 can claim tax deduction up to Rs 75,000

The family of a person with a disability percentage above 80 can claim tax deduction up to Rs 1,25,000

Documents Required to Claim deductions under Section 80 DD

Medical Certificate: To claim the deductions under Section 80 DD of the Income Tax Act, the taxpayer will have to submit a copy of the medical certificate given by the related authority.

Form 10-IA:  If a person is suffering from Autism, cerebral palsy or multiple disabilities, then Form 10-IA needs to be submitted.

Self-Declaration Certificate: Taxpayers, before applying for deductions under Section 80 DD has to provide a self- declaration certificate mentioning the expenses made on the medical treatment.

Receipts of Insurance Premium Paid:  Taxpayers will also have to provide the receipts of Insurance Premium Paid, to avail deductions under Section 80 DD.

Conclusion

The pain and agony through which the disabled person and his family members go through cannot be expressed in words. The society in which we live in adds on to the agony of disabled ones and their family members by passing unnecessary remarks. As a remedy to this situation, Indian Law added Section 80DD to the Income Tax Act which deals explicitly with disabled people. This section provides deductions in expenses made on medicines and the maintenance of the disabled person. This support from the government and other authorities cannot end the actual pain and suffering of disabled people and their family members. However, these efforts can help them in managing financial expenses to some extent.