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INCOME TAX BENEFITS FOR PERSONS WITH DISABILITIES

Specific provisions of India’s income tax regulations allow tax incentives to people and their families if they or any of their family members suffer from certain disabilities.

If a person suffers from a disability, Section 80U provides tax benefits, whereas Section 80DD provides tax benefits if an individual taxpayer’s dependent family member(s) suffers from a handicap. The purpose of this article is to explore the tax benefits available under Section 80U.

Who can claim a deduction under Section 80U?

A resident who has been certified by a medical authority as a person with a handicap can receive the tax benefit under Section 80U. A person with a handicap is defined in this section as someone who has a disability of at least 40%, as determined by medical authorities.

Disability has been defined as one of the following for the purposes of this section:

  • Blindness
  • Reduced vision
  • Leprosy-cured
  • Deficiency in hearing
  • Disabilities of locomotion
  • Mental deficiency
  • Illness of the mind

The section also includes a definition for a severe disability, which is defined as a situation in which the disability is at least 80%. Multiple impairments, autism, and cerebral palsy are examples of severe disabilities.

Deduction under Section 80U

Section 80U allows for deductions of up to Rs.1.25 lakhs in cases of severe disability and up to Rs.75,000 for people with impairments. The prior limitations of Rs.1 lakh for severe disability and Rs.50,000 for disability have been increased. From the evaluation year 2020-21 onwards, the amendments will be in force.

Requirements to claim deduction under Section 80U

Apart from the certificate establishing the disability from a recognized medical authority in Form 10-IA, there are no other documentation requirements. There is no requirement to produce bills for the costs of treatment or other charges.

To file a claim under this section, you must submit a medical certificate demonstrating your incapacity, as well as your income tax returns for the relevant AY, as per Section 139. Even though the disability assessment certificate has expired, such deductions can still be claimed in the year the certificate expires. However, in order to receive the benefits under section 80U in the following year, a new certificate will be necessary.

Certificates can be obtained from medical authorities such as a neurologist with a Doctor of Medicine (MD) in Neurology (or a pediatric neurologist with an equivalent degree in the case of children) or a civil surgeon or Chief Medical Officer in a government hospital.

If the handicap is temporary and requires evaluation after a period, the certificate’s validity begins with the assessment year applicable to the financial year in which it was granted and ends with the assessment year applicable to the financial year in which the certificate expires.

Difference between Section 80U and 80DD

Family members and kin of a disabled taxpayer are eligible for tax deductions under Section 80DD, whereas the individual taxpayer with a handicap is eligible for deductions under Section 80U.

If a taxpayer pays a defined amount as an insurance premium for the care of a dependent disabled person, Section 80DD applies. The deduction limits for section 80DD are the same as for section 80U. A dependent is defined as the assessor’s siblings, parents, spouse, children, or a member of a Hindu Unified Family.

By Priyasha Sen Gupta