Section 80DD Expenses: Claim tax deduction on medical expenses for disabled persons

Individuals or HUFs can claim an exemption under Section 80DD of the Income Tax Act for a disabled person who is wholly dependent on the Individual/HUF for support and services.

Points To Remember

Conditions for claiming exemption under section 80DD

To avail of this discount, need to the following conditions:

• Taxpayers are entitled to payment, not taxpayers.
• If the taxpayer claims exemption under section 80U for himself, the taxpayer cannot claim this exemption.

Taxpayers include spouses, children, parents, siblings, and parents. As for HUF, it means a member of HUF.

If the taxpayer pays for medical care (including nursing care), education, and rehabilitation of a disabled person, or if the taxpayer pays for a life insurance policy to protect dependents.

• The relationship has a disability of at least 40%.
• Persons with disabilities are defined by section 2(i) of the Persons with Disabilities Act 1995.

Who is dependent on a disability?

Under section 80DD, a person can qualify as a disabled person under the following conditions, so his dependent can claim an income tax deduction:

• A disabled dependent can include a spouse, son or daughter (or any child), parents, and siblings (brother or sister).
• For Hindu Undivided Families (HUF), any disabled member of the HUF can be a dependent of the disabled person.
• Persons with disabilities must be wholly or primarily dependent on taxpayers for assistance and support.
• Further, no deduction under section 80U should be claimed.

Any type of disability or serious disability is eligible under section 80DD

Under the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995, disability is defined in clause (i) of section 2 as well as in sections (a), (c), and (h) of section 2. (Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities Act, 1999). The following disabilities:

• Low vision
• Blindness
• Autism
• Cerebral palsy
• Locomotor disability

Mental illness

• Treated leprosy
• Hearing impairment
• Have severe cognitive or mental disabilities
• Or multiple disabilities

A person cannot have less than 40% of the above disabilities. In the case of severe disability, 80% or more of the above diseases or disabilities are considered.

Documents claiming tax deduction under section 80DD

To claim tax deductions U/s 80DD as per the Income Tax Act, 1961, the below-given documents must be submitted:

Medical certificate – Medical certificate is required to be produced while claiming exemption in a government hospital for specified disabilities. The relationship must have a document that proves their disability and the document of the person they belong to. The certificate must be renewed regularly.

10-IA Form may be submitted by individuals for autism, cerebral palsy, as well as multiple disabilities. There are two alternative formats to the above for those suffering from severe mental illness and other disabilities.

Self-Declaration Certificate - Individuals must also submit a self-declaration, signed, certifying the costs of medical care for the disabled, including nursing care, rehabilitation, and training.

Paid Insurance Premium Income - No need to keep disability-related expense receipts. However, actual income must be provided if a deduction is claimed for payment to any insurance company for disability benefit plans or schemes.

Section 80DD: Conditions for deduction of tax

For the Claim, the deduction then follows the below-given condition:-

• To apply for an exemption, you need to present a printed copy of the medical certificate issued by the central or state government medical board.
• The insurance policy must be in the name of the tax assessor and must be a life insurance policy and not a health insurance policy. In case of untimely death, you can give a lump sum or annuity to the disabled.
• If the disabled person dies before the taxable amount, the policy amount is refunded to him; Therefore, it will be treated as income and therefore taxable.

Exemptions under section 80DD

Amount of discount provided above conditions are met not -

• For disabled persons above 40% but below 80% tax payment of Rs 75,000 is required (for 2016-2017).
• Tax deduction of Rs.1.25.00 for persons with more than 80% disability
• These deductions are allowed regardless of your expenses.
• Note that till FY 2015-16 (FY 2014-15 and previous years) - Rs.50,000 for more than 40% deficiency and Rs.1,00,000 for more than 80% deficiency.

The tax deduction does not affect the amount of expenses, regardless of whether the actual expenses of the disabled family member are less than the above amount; the tax levied will be eligible for the full deduction.

How deduction under Section 80DD can be claimed?

To claim a deduction under Section 80DD, the individual are required to have a copy of Form 10-IA issued by a medical authority. Although this form doesn't required to be attached to the Income Tax Return, but the individual is advisable to keep it in case of any verification.