Section 80DD of Income Tax Act: All you Need to Know

The idea of deductions to be made while calculating the total income is covered in Chapter VI A of the Income Tax Act of 1961. Sections 80C to 80U deductions are also included in this chapter.

Table of Contents

What expenses are deducted from income tax calculation?

According to Section 80DD, the enumerated costs that are excluded from income tax are as follows:

The costs associated with the nursing care, education, and rehabilitation of a dependent who is handicapped, as well as any medical expenditures.
Amount paid to Unit Trust of India (UTI), Life Insurance Corporation (LIC), or any other insurer with the express intent of purchasing the designated plans or insurance policies that help with the maintenance and treatment of a dependent who is disabled.

Section 80DD of Income Tax Act: Eligibility

The following requirements should be met to qualify for the deduction under Section 80DD:

Be a resident of India who is an individual or a member of a Hindu Undivided Family (HUF).
An NRI is ineligible for this deduction since many countries.

Who is a disabled dependent under I-Tax Act?

If a person meets any of the following requirements, they may qualify as a disabled dependent under section 80DD of the Income Tax Act of 1961, and their caretaker may benefit from income tax deductions as a result:

Any sibling, including a son or daughter, a spouse, parents, or even a brother or sister, may be regarded as a handicapped dependent.
Every Hindu Undivided Family (HUF) is affected by this; hence any HUF member may be regarded as a dependent with a disability.
It is important to remember that the handicapped person will depend entirely or primarily on the taxes withheld for assistance, care, and upkeep.
Additionally, the dependent who is handicapped cannot receive the section 80U deduction.

What disabilities are covered under Section 80DD?

A precise description of the disability needed by Section 80 DD is provided in Section 2 clause I of the “Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.” The impairments listed in Section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities Act, 1999, clauses (a), (c), and (h), are also included in this description. As a result, the following disabilities are covered by section 80 DD of the Income Tax Act of 1961:

Cognitive impairment or serious mental illness
Blindness
Leprosy-cured
Deficiency in Hearing
Locomotor impairment
Autism
Mental illness
Multiple impairments or cerebral palsy

The affected person must also have at least 40% of each of the aforementioned impairments, it’s crucial to keep in mind. In addition, one or more of the aforementioned diseases or impairments that account for 80% or more of severe disabilities are taken into account.

What to consider to claim Section 80DD deduction?

When claiming the deduction allowed under section 80 DD with regard to the aforementioned impairments from any Government Hospital, a medical certificate is required. Additionally, the paper should attest to both the dependent person’s and the dependent person’s impairment. The relevant certificate must also be periodically and compulsorily renewed.

For those with numerous impairments or disorders like autism, cerebral palsy, or any other, form 10-IA must be properly completed and submitted on their behalf.

For a person with any type of serious mental illness plus the other impairments, there are two more forms in addition to those already listed. Additionally, individuals must provide a self-declaration that is properly signed and attests to the costs expended for the dependent’s handicapped person’s medical care, which includes nursing, education, and rehabilitation.

It is not required to save the original receipts for the expenses related to caring for dependents with disabilities. However, the same exact receipts are required to be given in order to deduct payments paid to any insurer, such as LIC (Life Insurance Corporation), UTI (Unit Trust of India), and others, in order to get insurance plans or schemes for the maintenance and care of a dependent who is incapacitated.

Where can someone get a medical certificate for a dependent with disabilities?

The following individuals can assist a person in obtaining a medical certificate in order to claim tax deductions given under Section 80DD of the Income Tax Act, 1961, according to the Income Tax Laws:

A doctor of medicine (MD) in neurology-trained neurosurgeons or a paediatric neurosurgeon with comparable education.
A Civil Surgeon or the Chief Medical Officer (CMO) of any government hospital

Tax deduction for dependents with disabilities

Before delving further, it is crucial to realise that in the event that a dependent who is disabled passes away before the person who is subject to taxation, the taxed person will be subject to taxation on the premium amount paid during that fiscal year, as this will be regarded as the survivor’s income for that fiscal year. As a result, the entire income will be fully taxed.

For what was formerly referred to as a handicapped dependent, the tax deduction allowed under section 80DD is Rs 50,000. (40 per cent and over disability) Since 2016, this cap has increased to a maximum of Rs 75,000.
For what was formerly classified as the seriously crippled dependent, a tax deduction of Rs 50,000 is offered under Section 80DD (80 per cent and over disability). Since 2016, this cap has increased to a level of Rs 1,25,000.
Although the actual expenditures paid by the relative of the crippled dependent are less than the aforementioned amount, the tax computed will be entitled to the entire deduction. Nevertheless, the deduction is not accessible on the number of expenses incurred.

What requirements must be satisfied to be eligible for a deduction under Section 80DD?

The following criteria must be met in order to qualify for a tax deduction:

People must present a paper copy of the medical certificate that certifies their handicap. To be eligible for the deduction claim, the pertinent medical certificate must be granted by the Central or State government Medical Board.
The insurance policy must be in the tax assessor’s name and must, by law, be a life insurance policy rather than a health insurance policy. Additionally, it may perhaps offer a basic or lump sum payment as the death benefit for the dependant who is incapable in the case of an untimely death.
The policy’s payout is returned to the taxpayer if the handicapped dependant passes away before them. As a result, the same sum would be considered earned income and taxed.

FAQs

What conditions must be met to be eligible for the deduction under Section 80DD?

According to Section 80DD, an individual can claim a deduction for expenditure incurred on medical treatment, training and rehabilitation of a dependent who is suffering from a disability. The dependent must be a relative of the taxpayer and must meet certain conditions specified in the Act. The disability must be certified by a medical authority, and the disability must be of a specified degree. The amount of deduction allowed is either Rs 75,000 or the amount of expenditure incurred, whichever is lower.

Is Section 80DD applicable to the differently abled persons?

No, Section 80DD of the Income Tax Act is applicable only to a dependent of the taxpayer who is suffering from a disability. The differently abled person himself cannot claim the deduction.

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