In the last few years, the cost of medical expenses has increased immensely and these expenses are almost out of reach for the middle and lower-class citizens. In order to provide some relief to its citizens, the government of India has provided deductions under section 80DD of the Income Tax Act, 1961. Expenses relating to medical treatment, nursing, rehabilitation and training of a disabled dependent as well as premium paid on the insurance plans or schemes are covered under section 80DD. Documents like medical certificate, Form 10-IA and actual receipts of the expenses must be submitted for claiming the deduction. The basic difference between section 80DD and section 80U is that under section 80DD deduction is applicable to the caretaker of the disable person while under section 80U deduction is given to the assessee himself/herself.
Understanding Section 80DD
An individual can claim for deduction under section 80DD if any expenditure on the medical treatment of a dependent family member with a medical disability has been incurred by the guardian. Deduction under this section is applicable if a guardian has deposited any amount as insurance premium with a specified insurer for the medical maintenance of the dependent person with a medical disability.
Conditions Upon which one can Claim for Deduction Under Section 80DD
Following are the criteria which makes one eligible for claiming deduction under section 80DD:
- An individual or a member of a Hindu Undivided family, who is a resident in India.
- This deduction is not available to non-resident Indians (NRI).
- This deduction is not allowed for the taxpayer himself but it is allowed for a dependent relative of the taxpayer.
- This deduction cannot be availed if the dependent individual has claimed deduction under section 80U for himself/herself.
Expenses Exempted Under Section 80DD
This deduction is available for the given conditions:
- The amount paid towards Life Insurance Corporation or towards any other insurers for buying a specified scheme for the medical expenses of the disabled individual.
- Disability should not be less than 40% for claiming the deduction.
- Disability should be definable under clause (i) of section 2 of the “Persons with Disabilities Act, 1995.”
The Factors Determining the Limit of Disability for Claiming Deduction
If a person falls under the conditions given in section 80DD of the Income Tax Act, 1961 then he/she is eligible to be considered as a disabled dependent.
The factors are listed as follows:
- For individuals, a dependent with a disability can be his/her spouse, son or daughter (or any other child), parents, siblings (brother or sister).
- For Hindu Undivided Family (HUF’S), any member of the HUF’s can be applicable as the dependent with a disability.
- The person with a disability should be dependent wholly or mostly on the caretaker for his/her support as well as the medical maintenance. Also, the disabled individual should not have claimed deduction under section 80U.
Disability or Severe Disability Included Under Section 80DD
For claiming deduction under section 80DD the person’s disability must be defined under section 2(i) of the Persons with Disabilities Act, 1995.
Hence, the following disabilities are included:
- Mental illness.
- Low vision.
- Mental retardation.
- Hearing impairment.
- Leprosy- cured.
- Locomotors disability.
- Cerebral palsy.
- Cognitive or severe mental disabilities.
- Or any other multiple disabilities.
The Deduction Limit Allowed
To claim deduction under this section, a person must not suffer any disability less than 40% and when it concerns severe disability, the individual must meet 80% severity of the illness.
|Disabled (a person with 40% or more of the disability)
||As per the revised limit of the financial year 2015-16, the deduction available under this category is up to Rs. 75,000.
|Severely Disabled (a person with 80% or more disability)
||As per the revised limit of the financial year 2015-16, the deduction available under this category is up to Rs. 1, 00,000.
Documents Required for Claiming the Deduction
Conditions for Claiming Tax Deduction Under Section 80DD
There are certain conditions for an individual to claim deductions under section 80DD.
The conditions are as follows:
- An individual is required to furnish a hard copy of the medical certificate stating the disability issued by the Central or State Government Medical Board to claim the deduction.
- The insurance policy or scheme should be in the taxpayer’s name. It must be a life insurance policy rather than a health insurance policy.
- To claim deduction under section 80DD, the dependent should not have claimed any other deduction under section 80U of the IT Act, 1961.
Difference Between Section 80DD and 80U:
||Under section 80DD Deduction is allowed to the caretaker of the disabled person.
||Under this section, the deduction is allowed to the assessee himself.
||The taxpayer has to incur some medical expenses for the disabled or deposit the amount under the disabled name in an insurance company.
||For claiming deduction under section 80U, an individual must just meet the disability requirement.
Frequently Asked Questions
Q. Can I claim deduction under section 80DD for any of my family member who is physically handicapped?
As per the Income Tax Act, 1961, benefit can be taken by any individual for his/her Dependent family member. So yes, one can claim the income tax benefit, if the family member is dependent on the individual taxpayer.
Q. What is the amount of deduction allowed under section 80DD?
Rs. 75,000 if the disability is more than 40% and Rs. 1, 25,000 if the disability is More than 80% (severe disability).
Q. Who is referred as the disabled dependent?
- For individuals, the dependent relative can be a spouse, son or daughter (or any other child), parents and siblings (brother or sister).
- For Hindu Undivided Family (HUF’S), any member of the HUF’s can be considered as the disabled dependent.
Q. I have spent Rs. 35,000 as expenses for caring a family member who is a disabled dependent. How many deductions be claimed under section 80DD?
A full amount of Rs. 75,000 as deduction can be claimed under this section for Disabled dependent and Rs. 1, 25,000 for severely disabled dependents, irrespective of the actual amount spent in caring for the medical expenses.
Q. What type of expenses are covered under section 80DD?
Expenses related to medical treatment, nursing, rehabilitation and training of a Disabled dependent, as well as premium paid on the insurance plans or schemes, are Covered under Section 80DD. basically, the expenses that benefit the disabled Person is covered under this section.