Section 80DD Tax Deduction

What Is Section 80DD?

Income Tax Act provides a deduction under Section 80DD for the medical treatment and insurance costs of a differently abled dependent. Who constitutes a dependent and what is are covered under ‘disabled’ category? What are the eligibility criteria for the deduction and what is the quantum of deduction? What kind of documents will you need to claim the deductions? We have all these answers here.

Section 80DD Eligibility Criteria

Who Can Claim Deduction Under Section 80DD

• Indian resident individuals and HUFs can claim the deduction
• NRIs cannot
• The deduction can only be claimed for medical expenses incurred on the disabled dependent and not for the treatment of the taxpayer.
• If the taxpayer is differently disabled, then they can claim deduction under Section 80U for medical expenses.
• If the dependent has claimed a deduction under Section 80U, then a section 80DD deduction cannot be claimed by the taxpayer.
• The deduction applies to the dependent who is being supported and whose medical care is funded by the taxpayer.
• The taxpayer can claim deduction for costs incurred in treatment, rehabilitation, nursing and training of the disabled dependent.
• The taxpayer can claim relief for premium paid towards a life insurance or an annuity plan, and not a health insurance plan.

Who Is Disabled Dependent According To Income Tax Laws?

The term covers spouse, children, parents or siblings. In case of an HUF, any member of the family can be a disabled dependent. But the disabled dependent must fully depend on the taxpayer for support and maintenance to claim deduction.

What Is ‘Disability'?

‘Disability’ is defined by clause (i) of Section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation). Disability also covers the list included the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (particularly in clauses (a), (c) and (h) of section 2).

Who Is A Person With ‘Severe Disability’?

According to the tax laws, a person with ‘severe disability’ is a person with 80% or more of the disability/disabilities mentioned in Section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or

Ones mentioned in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).

The list includes the following disabilities whose treatment is eligible for a deduction under Section 80D.

• Blindness
• Low vision
• Leprosy-cured
• Locomotor disability
• Hearing impairment
• Mental retardation
• Mental illness
• Autism
• Cerebral palsy
• Multiple disabilities

Keep In Mind:

• The disability of the dependent must not be less than 40%.
• Those with disability higher than 80% fall under the category of ‘Severely Disabled’.
• If the disabled dependent passes away, then the premium amount claimed in the previous year will be considered as the taxpayer’s income and taxed accordingly.

Amount Of Tax Deduction Under Section 80DD

Tax Deduction For Disabled Dependents

You can claim Rs.75,000 in case of disability between 40% to 80%. During FY1516m this deduction amount was increased from the earlier limit of Rs.50,000.

Tax Deduction For Severely Disabled Dependents

If you are paying for the medical expenses of a severely disabled dependent, that is, someone with disability higher than 80%, then you can claim a deduction of Rs.1,25,000 in a financial year. Till FY1516, the limit was Rs.1,00,000.

Documents Required To Claim Exemption Under Section 80DD

• Medical Certificate

You must produce a medical certificate that authenticates the caretaker and dependent relationship along with specific mention of the disability. This certificate must be certified by a ‘medical authority’. Make sure the medical certificate is updated.

Who is Medical Authority?

Those who are eligible to authenticate the medical certificate include: - Civil Surgeon or Chief Medical Officer of a government-run hospital. - Neurology expert with an MD in Neurology - Paediatric Neurologist with an equivalent degree

• Form 10-IA

To claim deduction under Section 80DD for disabilities like autism, cerebral palsy and multiple disabilities, you will need to submit Form 10IA. The Form also mentions the nature of the disability and if a reassessment is recommended. This Form must be certified and signed by the medical authority.

Who is authorized to certify Form 10-IA? - Civil Surgeon or Chief Medical Officer of a Government run hospital. - Neurology expert with an MD in Neurology - Paediatric Neurologist with an equivalent degree

• Self-declaration Certificate

You must provide a self-declaration certificate on the costs you incurred in the medical treatment of the disabled dependent.

• Receipts of Insurance Premium

To claim deduction on insurance premium, you must produce the receipts of premium paid. For all other costs of treatment and rehabilitation, the self-declaration certificate should suffice.