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Tax Deductions for Disabled Persons under Section 80U: A Complete Overview

Deepti Shikha

| Updated: Apr 14, 2020 | Category: Income Tax, Taxation

Tax-Deductions-For-Disabled-Persons-under-Section-80U

The Income Tax Act, 1961 allows deductions from the total gross income, before charging the tax, in case medical expenditure has been made on the treatment of a differently-abled person. Section 80DD and Section 80U of the Income Tax Act, 1961 deals with the medical expenses incurred for specially-abled persons. Section 80U offers tax benefits if an individual suffers a disability himself/ herself, whereas Section 80DD offers tax benefits if an individual taxpayer’s dependent family members suffer from any disability. In this article, we shall discuss the tax benefits prescribed section 80U of the Income-tax act.

What is Section 80U of the Income Tax Act?

According to Section 80U of the Income Tax Act, 1961, individuals who have a disability can claim tax deduction while filing their income tax returns. The disabled person must be recognized by medical authorities to become eligible for tax deductions. The taxpayer here should be a resident individual and also must prove 40% disability from a recognized medical authority.

Who is Eligible to Claim Deduction under Section 80U?

As prescribed under section 80UA, a resident individual who is certified as a person with a disability by the medical authority can claim tax benefit under this section. A person with a disability is a person who has at least 40 per cent disability, certified by the medical authorities.

For the purposes of this section disability has been explained as one of the following:

Eligible to Claim Deduction under Section 80U

Low vision

Low vision applies to individuals with visual function impairment that cannot be cured by any medical procedure still they are capable of using their vision with the help of different gadgets.

Blindness

When a person suffers from any of the conditions which are mentioned below, falls under this criterion:

  1. Total lack of sight.
  2. Visual acuity  which must not exceed 6160 or 201200 (Snellen) in the better eye with correcting lenses
  3.  Limitation of the field of vision subtending to an angle of 20 degrees or worse.

Mental Illness

Any mental disorder other than retardation comes under the definition of mental illness.

Loco Motor Disability

Loco motor disability” is a disability of the bones or joints muscles which may restrict the movement of the limbs or any form of cerebral palsy.

Mental Retardation

A state of arrested or incomplete development of the mind of a person which is especially characterized by subnormality of intelligence is mental retardedness.

Hearing Impairment

“Hearing impairment” means loss of sixty decibels or more in the conversational range of’ frequencies.

Leprosy Cured

Leprosy cured person” is any individual who has been cured of leprosy but is suffering from

  1. Loss of sensation in hands or feet as well as the loss of sensation and paresis in the eye and eye-lid but with no manifest deformity
  2.  Manifest deformity and paresis; but having sufficient mobility in their hands and feet to enable them to engage in regular economic activity
  3. Extreme physical deformity as well as advanced age which prevent him from undertaking any gainful occupation, and the expression “leprosy cured” shall be construed accordingly.

Multiple Disabilities

Any person is having more than one disability of the above.

A person suffering from 80% or more of one or mare disabilities comes under the definition of severe disability.

  • Disability has also been defined under the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1955.

What are the Documents Required to Claim Deduction under Section 80U?

  • No documents other than a certificate of disability from a recognized medical authority are required.
  • The certificate from medical authority must be provided in Form 10-IA.
  • There is no need to show bills for the cost incurred in the treatment or any other expenses.
  • For claiming under section 80U, the taxpayer must submit the medical certificate indicating the disability along with the income tax returns as per Section 139 of the Income-tax Act, 1961 for the relevant assessment year.
  •  If by chance, the disability assessment certificate has expired, the person will still be able to claim such deductions in the year in which the certificate expires. However, a fresh certificate must be presented from the succeeding year for claiming the benefits u/s 80U.
  • The Certificates can be received from the medical authorities who should either be, a neurologist having a degree of Doctor of Medicine (MD) in Neurology and (in case of children, a pediatric neurologist having an equivalent degree or a civil surgeon or Chief Medical Officer in a government hospital.

What is the Amount of deduction available under Section 80U?

Tax deductions under Section 80U of the Income Tax Act, 1961 is Rs. 1.25 lakhs in case of severe disabilities and Rs.75, 000 for individuals with disabilities.

Type of Disability   Amount to be deducted under Section 80U
General Disability Rs.75,000
Severe Disability Rs.1.25 lakhs

You can better understand this with the help of this illustration:

 In case the taxpayer’s aggregate income is Rs. 20 lakhs and he suffers from a 60% disability, he can avail a deduction of Rs. 75,000 which will reduce his total gross income to Rs. 19.25 lakhs. The computation of the tax liability will change.

What constitutes a medical authority?

Below mentioned, medical authorities are eligible to issue a medical certificate:

  • A civil surgeon or Chief Medical Officer (CMO) of a government hospital.
  • A neurologist having an MD in Neurology.
  • In case of children a Pediatric Neurologist.

Why is the deduction allowed in Section 80U?

Disabled persons many times have additional medical expenses because of the disability they suffer. They also have to spend a vast amount of money on medical treatments and facilities, which will enable them to lead a healthier life. These expenses are extra expenditure into their incomes and taxing them on their total income will not at all be fair. That is why the tax deduction is allowed on their aggregate income which helps in reducing the income chargeable to tax. As the income is reduced, the tax liability also gets reduced, giving a respite to the disabled tax-payers tax relief.

What are the Terms and conditions to avail deductions under Section 80U?

  • A duly signed medical certificate mentioning the disability should be submitted in Form 10-IA.
  • The Proof of expenses done on medical treatments and rehabilitation of the disabled taxpayer is not be required because the deduction is allowed at a flat rate irrespective of the actual costs incurred.
  • The medical certificate must mention all the details of the disability of the taxpayer.
  • The medical certificate must be submitted with the income tax returns filed by the individual taxpayer. According to section 139, the tax return must be filed.
  • The disability certificate has a specified validity. If the validity of the certificate expires in any financial year, the deduction for that financial year can be claimed using the expired certificate. However, from the next financial year, a new certificate would have to be availed for claiming deduction under Section 80U in the next year.

What is the Difference between Section 80DD and Section 80U?

Both sections 80DD and Section 80U provides a deduction based on disability or severe disability. The main difference between the two sections is that section 80DD delivers a deduction to a taxpayer in case any of the dependent family members such as spouse, parents, children, and siblings are suffering from a general disability or severe disability. However, section 80U provides a deduction to an individual himself suffering from a general disability or severe disability.

Can a Person Claim Deduction Both under Section 80DD and Section 80U?

Claiming deduction under section 80DD is possible when any dependent family member has a disability or severe disability; however, claiming deduction under section 80U is possible when the individual himself has a disability. Only in the case when both a dependent family member and an individual himself have a disability, claiming deduction under both section 80DD and 80U gets possible.

Conclusion

The deduction amount given under section 80U is a lump sum amount, regardless of how much expenditure is made on the treatment, which in many ways is unfair for the disabled persons. As Section 80U provides tax deductions only for persons with 40% disability, the person having disability level below this are left out. Section 80U of the Income Tax Act provides a deduction to an individual who is certified by the medical authority to be a person with a disability or person with a severe disability. No medical bills or insurance premium receipts are to be submitted to claim income tax benefits.

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Deepti Shikha

Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. She has enough experience in handling legal affairs of the company. In the initial days of her career, she has worked as a legal researcher and has 3+ years of experience.

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