Section 80DD is a section under the Income Tax Act 1961 that allows tax deductions to families with a differently-abled member. This section is incorporated to support a family in properly caring for the dependent person without any financial burden.
When you have a disabled person in a family, there are bound to be certain necessary expenses that you must incur in the care and well-being of that person. Looking at the extent of such expenses, the Indian law has made them tax-free to support such families in managing their budgets well.
Let us look at the eligibility, claim deduction, and other features of this section in this post.
What is section 80DD? What does section 80DD talk about?
As discussed above, section 80DD is a deduction associated with people with disability. This section provides tax exemptions for maintenance, including medical treatment of a dependent member of a family with disability. Thus, this section supports families in caring for a disabled member without financial challenges.
You may note that the deductions under section 80DD can be claimed only by the family of the disabled person and not the disabled individual. So, if any deduction has been claimed by the disabled under any other section of income tax, section 80DD will not be applicable.
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Who, as per sec 80DD, is regarded as a disabled person?
Under section 80DD, anyone who is challenged in terms of physical or mental capability to perform the tasks or activities that a normal person easily performs is regarded as a disabled person.
Tax exemption offered to the family of people with disabilities under this section depends on the percentage of disability of the concerned person.
Who is entitled to benefit from section 80DD deductions?
Income tax deductions under section 80DD can be claimed by taxpayers belonging to HUFs or Hindu Undivided Families as well as by other resident Indians with a disabled person in the family. The exemptions can be claimed for expenses incurred in caring for disabled individuals, including health insurance premiums paid towards healthcare, medicine, and overall maintenance of the disabled person.
Maximum Amount Allowed as Deductions Under Section 80DD
Section 80DD of the Income Tax Act allows a fixed deduction amount regardless of the expenditure. However, the exact amount to be deducted would depend on the level of disability and its severity.
If the disability is above 40% and below 80%, the maximum deduction available is INR 75,000. On the other hand, if the disability is above 80%, the maximum deduction available is INR 1,25,000.
What are the terms and conditions to apply for section 80DD?
Conditions to avail of section 80DD deductions
As per the Income Tax Act of 1961, the permitted deduction limit under section 80DD is up to INR 75,000. However, this is applicable for families with a member who has a disability of up to 40%. If the disability is up to 80% and above, the exemption claim can be made up to INR 1.25 lakhs per annum u/s 80DD for the maintenance and care of a disabled person.
The dependent under this category can be your spouse, parents, siblings, children, or any other member of the family coming under a HUF.
Eligibility to claim section 80DD deductions
Below are some conditions to meet to be eligible to avail of this deduction:
- The Deduction cannot be availed of by the taxpayer himself; rather, it can be availed of for a disabled dependant of the taxpayer
- 80DD deduction can only be claimed by Indian residents, and HUFs only
- However, the taxpayer cannot avail of this deduction if the disabled dependant has already claimed tax exemption u/s 80U
- People regarded as dependents of the taxpayer under this section include the taxpayer’s spouse, their children, parents, and siblings of the taxpayer. If it is a HUF or Hindu Undivided Family, the dependent can be any member of the HUF
- The taxpayer u/s 80DD can get a tax deduction for expenses incurred on the medical treatment of the disabled, including medicines, nursing, and therapy for the disabled
- Disability of the dependant person should not be less than 40% to avail of the deduction
Documents required to avail of 80DD deductions
The following documents are required to claim tax benefits under Section 80DD:
- A copy of the medical certificate as evidence of the disability of the dependent
- Form 10-IA is required in case the disability is related to cerebral palsy, autism, etc.
- You are also required to submit a self-declaration certificate where you need to mention the expenses incurred on the health of the disabled
- You may have to submit the receipts of insurance premiums paid to claim a deduction for premiums of health insurance policy purchased for the disabled
Disabilities included under section 80DD
Here is a list of disabilities included under section 80DD for which tax deductions can be claimed:
- Blindness is termed as a disability u/s 80DD
- Low Vision is another condition termed as disability u/s 80DD
- Anyone with a locomotor disability such as cerebral palsy, a condition that restricts movement of the limb
- Hearing impairment or people with hearing loss are regarded as disabled u/s 80DD
- Mentally impaired is another condition regarded as a disability u/s 80DD
Things to consider while applying for section 80DD
- Funds received from an insurance policy in case of death of the disabled dependent are liable for deduction under the Income Tax Act, 1961, as per the applicable tax bracket
- The deduction available u/s 80DD applies over and above the deductions available under other sections of the Income Tax Act.
- The deductible 80DD limit of INR 75,000 applicable at present was approved in 2015-2016, which was earlier limited to INR 50,000. Further, if the disability is severe, the deductible amount claimed can go up to INR 1.25 Lakhs, which was earlier INR 1 lakh.
Difference between section 80DD and section 80U
The key difference between section 80DD and section 80U is that section 80U allows disabled persons to claim tax deductions for themselves, while under section 80DD, tax deductions can be incurred by the family of the disabled person on their healthcare expenses.
On the other hand, under section 80DD, the family of the insured cannot claim tax exemptions if the disabled person has already availed of tax exemptions under other sections like 80U.
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Deduction under section 80DD is offered for the expenses incurred for the maintenance of a disabled person, including medical treatment. You may avail of this deduction to manage your budget in case you have a differently-abled dependent in your family.
FAQs: What is Section 80DD?
What expenditures are covered under Section 80DD?
The expenses covered under section 80DD include medical care and maintenance of the disabled dependent. It includes medical expenses, therapy, and other costs, like nursing, etc., for the disabled.
Is there a relevant form to be filled out for claiming deductions under section 80 DD of the Income Tax Act?
No, there are no such forms to be filled out to claim deductions under section 80DD. All you need is to submit a medical certificate from the medical authorities to prove the disability.
If I spend INR 40,000 for the maintenance and care of a disabled family member, how much deduction can I claim?
You can claim a deduction of up to INR 75,000 for a disability of up to 40% and up to INR 1,25,000 for disability above 80%, regardless of the expenditure.