Understanding who can claim 80DD Deduction under the Income Tax Act

The Income Tax Act of India provides various deductions and exemptions to taxpayers to encourage savings and support specific social causes. One such provision is Section 80DD, which deals with deductions related to expenses incurred on the medical treatment and rehabilitation of dependents with disabilities. This section aims to ease the financial burden on individuals taking care of their disabled family members. In this blog, we will delve into the details of the 80DD deduction, including its eligibility criteria, quantum of deduction, and documentation requirements.

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Table of Content

What is a deduction under 80DD?

What is the Eligibility Criteria claim deduction under 80GG?

What is the Deduction Maximum amount available under section 80DD?

What are the documentation and certification requirements to claim a deduction?

How 80DD is different from 80U

What are the Disabilities covered under Section 80DD

How to Obtain Disability Certificate for section 80DD?

Conclusion

FAQs

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What is a deduction under 80DD?

Section 80DD falls under Chapter VI-A of the Income Tax Act, which covers deductions available to individual taxpayers. This particular section is designed to offer relief to individuals who have dependents with a disability.

What is the Eligibility Criteria claim deduction under 80GG?

Dependant Eligibility: The crux of Section 80DD lies in its focus on the dependant, encompassing the spouse, children, parents, brothers, and sisters of the taxpayer (or members of a Hindu Undivided Family - HUF).

Taxpayer's Residential Status: Deductions under Section 80DD are exclusively available to resident individuals of India. Non-resident taxpayers are not eligible to claim these deductions.

Non-Double Deduction: An essential point to note is that a taxpayer cannot claim Section 80DD deductions if the dependant has already availed deductions under Section 80U for themselves.

Nature of Expenses: The taxpayer becomes eligible for deductions if they have incurred expenses for the medical treatment, including nursing, training, and rehabilitation, of the differently-abled dependant. Additionally, deposits made in schemes of LIC or other insurers for the maintenance of the dependant also qualify.

Disability Criteria: To qualify, the dependant's disability should not be less than 40%, as defined under Section 2(i) of the Persons with Disabilities Act, 1995.

What is the Deduction  Maximum amount available under section 80DD?

The deduction allowed under Section 80DD is a fixed amount, irrespective of the actual expenses incurred. As per the Income Tax Act, the maximum deduction allowed is:

-   Rs. 75,000:   If the disability is between 40% to 80%.

-   Rs. 1,25,000:   If the disability is 80% or more.

What are the documentation and certification requirements to claim a deduction?

To claim tax benefits under Section 80DD of the Income Tax Act, 1961, individuals need to furnish specific documents to substantiate their eligibility and the expenses incurred. Here is a breakdown of the requisite documents:

Medical Certificate:   To support the claim for tax deduction under Section 80DD, individuals must submit a copy of the medical certificate. This certificate serves as evidence of the disability that the dependent is experiencing.

Form 10-IA:   In cases where the dependent is affected by conditions such as autism, cerebral palsy, or multiple disabilities, it is mandatory to provide Form No. 10-IA as part of the documentation.

Self-Declaration Certificate:   Taxpayers are required to submit a self-declaration certificate detailing the expenses incurred on the medical treatment, including nursing, rehabilitation, and training, for the disabled dependent. This document serves as a crucial affirmation of the financial aspects of caring for the dependent.

Receipts of Insurance Premium Paid:   While a self-declaration certificate generally suffices for most expenses, it's essential to retain actual receipts, particularly when claiming expenses related to insurance policies taken for the disabled dependent. These receipts serve as tangible proof of the incurred expenses.

How 80DD is different from 80U

Section 80DD and Section 80U under the Income Tax Act 1961, both provide deductions for individuals, but they differ in terms of the beneficiaries and the nature of the deductions. Here's a concise comparison of the two sections:

Nature of Deduction:

• Section 80DD provides a deduction for expenses incurred on the dependent's disability.

• Section 80U provides a deduction for the taxpayer's own disability.

Eligible Entities:

• Section 80DD is applicable to both individuals and HUFs.

• Section 80U is only applicable to individual taxpayers.

Criteria for Claiming Deduction:

• Section 80DD requires expenses on the dependent.

• Section 80U requires the taxpayer to have a specified disability.

What are the  Disabilities covered under Section 80DD

Blindness: A condition where a person has a total absence of sight or visual acuity not exceeding 6/60 or 20/200 (Snellen) in the better eye with correcting lenses.

Low Vision: A person with low vision has visual acuity not exceeding 6/18 or 20/60 up to 3/60 or 10/200 (Snellen) in the better eye with correcting lenses.

Leprosy-Cured: Individuals who have been cured of leprosy but still suffer from deformities.

Hearing Impairment: A condition where the sense of hearing is non-functional for ordinary purposes of life.

Locomotor Disability: This includes conditions such as cerebral palsy, orthopedically handicapped, or any other condition that hinders the normal functioning of the limbs.

Mental Retardation: A condition characterised by significant sub-average intellectual functioning along with limitations in adaptive functioning.

Mental Illness: Any mental disorder other than mental retardation

Autism: Autism is characterised by challenges in social interaction, communication, and repetitive behaviours

Cerebral palsy:  Cerebral palsy is a neurological disorder that affects movement, muscle coordination, and posture. It is caused by damage to the developing brain, often occurring before birth, during childbirth, or shortly after

How to Obtain Disability Certificate for section 80DD?

Civil Surgeon: In many cases, a civil surgeon or a government hospital's medical officer is designated as a medical authority to issue disability certificates.

Registered Medical Practitioner: A registered medical practitioner who is recognized by the Medical Council of India or any State Medical Council can also issue a medical certificate for a dependent with a disability.

A neurologist or Orthopedic Surgeon: Depending on the nature of the disability, specialized doctors such as neurologists or orthopaedic surgeons may be authorized to issue certificates.

Government Hospitals or Medical Boards: Certificates issued by medical boards or government hospitals are often considered valid. Medical boards may comprise a panel of specialists who collectively assess and certify disabilities.

Key Points to Remember: 

Proceeds received from an insurance policy in the unfortunate event of the death of a dependent are subject to income tax deduction according to the applicable tax brackets. It's important for taxpayers to be aware that any such insurance proceeds are considered as part of the taxable income and are liable for taxation at the rates specified by the income tax laws.

Under Section 80DD of the Income Tax Act, taxpayers are entitled to a deduction for the expenses incurred on the medical treatment, rehabilitation, training, or deposit in specified schemes for the maintenance of a dependent with a disability. This deduction is applicable over and above any other tax deduction claimed under different sections of the Act.

 To claim the deduction under Section 80DD, taxpayers should fill in the relevant details in their income tax return (ITR) form. The certificate from the medical authority and other supporting documents should be kept for verification.

 In some cases, the certificate obtained from the medical authority needs to be renewed periodically. Taxpayers should be aware of this requirement to continue claiming the deduction.

Conclusion:

Section 80DD serves as a crucial provision in the Income Tax Act, offering financial support to individuals taking care of dependents with disabilities. Understanding the eligibility criteria, documentation requirements, and the maximum deduction limits is essential for taxpayers looking to avail themselves of this benefit. As always, consulting with a tax professional or financial advisor can provide personalized guidance based on individual circumstances.

FAQs

Q1. How much deduction can I claim if I have done expenditure of INR 32,000?

You can claim full deduction of Rs 75,000 or 1,25,000 irrespective of the actual expenditure.

Q2. What type of expenses are covered under Section 80DD?

You can claim expenses done for treatment, nursing, training, rehabilitation of the dependent along with insurance premium paid on plans specified for the dependent.

Q3. What documents are required to claim deduction under section 80DD?

To claim deduction under Section 80DD, you will need to submit a certificate in Form 10IA attested by medical authority. This certificate is for certifying the ‘person with disability’, ‘severe disability’, ‘cerebral palsy’, ‘autism’,  and ‘multiple disability’ for purposes of section 80DD.

Q4. How much deduction is allowed under Section 80DD? 

The deduction is up to Rs. 75,000 for disabilities between 40% to 80%, and Rs. 1,25,000 for disabilities exceeding 80%.

Q5. Who is considered a dependent under Section 80DD? 

  Dependents include spouses, children, parents, brothers, and sisters for individual taxpayers and members of the Hindu Undivided Family (HUF).

Q6. Can I claim deductions for insurance premiums paid for a dependent with a disability? 

Yes, you can claim deductions for insurance premiums paid for a dependent with a disability, but it's essential to maintain the actual receipts as proof.

Q7. Can deductions under Section 80DD be claimed in addition to other deductions? 

Yes, Section 80DD deductions can be claimed over and above any other tax deductions claimed under different sections of the Income Tax Act.

Q8. Is there any renewal requirement for the medical certificate under Section 80DD? 

In some cases, the certificate obtained from the medical authority needs to be renewed periodically for continued eligibility.

Q9. Can NRIs claim deductions under Section 80DD? 

No, deductions under Section 80DD are available only to resident individuals and Hindu Undivided Families (HUFs).

Q10. Are there different deduction limits for specific disabilities under Section 80DD? 

No, the deduction limits are uniform for disabilities falling between 40% to 80% and for disabilities exceeding 80%.

Q11. What is Section 80U of the Income Tax Act? 

Section 80U provides deductions for individual taxpayers who themselves are suffering from a specified disability.

Q12. How much deduction is allowed under Section 80U? 

The deduction is a fixed amount of Rs. 75,000 for individuals with a disability and Rs. 1,25,000 for individuals with severe disability.