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Section 80DD provides tax benefits to the families of disabled dependants for the purpose of supporting, caring, and maintaining them. It can be claimed by caretakers who are resident Indians. They can be individual persons or resident Indians.
The disabilities included under this section are given by the National Trust for Welfare of Person with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities Act, 1999 and the “Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. The various disabilities included are:
The disability of the dependant must not be less than 40%. If the dependant is severely disabled, then 80% of one or more of the above mentioned disorders will be considered.
The following documents have to be submitted to claim tax deduction under 80DD.
3. Medical Certificate: This is the most important certificate. The taxpayer has to submit the medical certificate which certifies the disability.
4. Receipts of the Insurance premium paid: The receipts of the payments made towards the medical treatment of the person need not be preserved. This is because the self-declaration certificate stating all the expenses incurred alone is sufficient to make the claim under 80DD. However, when a claim is made for the insurance premium payments of the disabled dependant, then the related receipts have to be submitted.
The following example illustrates how 80DD deduction amount can be calculated?
Shankar is a resident Indian. He deposits Rs. 50,000 annually with LIC for the medical care of his handicapped sister. She is solely dependent on him. What is the amount of deduction under 80DD?
If the disability is not less than 40%, Shankar can claim a deduction of Rs. 75000. If the disability is not less than 80%, then, he can claim a deduction of Rs.125,000.
Section 80DD allows tax exemptions for insurance deposits made in particular plans for the medical care, support, and maintenance of the disabled dependant. The following are the conditions to be observed to claim the deduction.
In section 80DD, the taxpayer who pays towards the medical treatment of the dependant claims the tax. But, in the case of Section 80DD, the dependant can claim the tax by himself. The other parameters, such as diseases covered, the way in which deduction is claimed, and the specifics are the same across both the sections.
Tax deduction under Section 80DD is a great benefit for Indian citizens. It aims to protect the disabled and the differently-abled. It reduces a substantial amount in the taxable income of the person who takes care of the medical needs of the dependant.
1. Can I claim both 80DD and 80DDB?
As per section 80DDB, resident Indians or HUFs can claim tax exemptions on medical expenditures acquired on themselves or a dependant family member for certain diseases listed in the Act. Just like Section 80DD, Section 80DDB also includes spouse, child, brother, sister, or parent dependent on you.
2. What Is the difference between 80C and 80D?
Section 80C provides tax deductions on various types of tax-saving investments, such as ULIP, PPF, ELSS, EPF, LIC premium, etc. Section 80D enables tax deductions on health insurance premiums paid for self, family, parents. It also includes expenditures on precautionary health check-ups.
3. Is 80U applicable in the new tax regime?
An individual who has a disability of 40% or a severe disability of 80% can claim tax deduction under Section 80U of the Income Tax Act.
4. What are the deduction under 80C to 80U?
Individuals can avail tax deduction benefits for payments made towards life insurance policies, superannuation, provident funds, fixed deposits, building or buying of residential properties, and tuition fees under Section 80C of the income tax act. Resident Indian taxpayers who have disabilities only can obtain tax deductions under Section 80U. They have to be certified by a medical practitioner. Some of the diseases covered are autism, cerebral palsy, mental retardation, and so on. A person with disability can claim a deduction of Rs. 75,000 yearly while a person with acute disability can claim a deduction of Rs. 1,25,000 per year.
5. What is the difference between 80D and 80DD?
Tax benefits can be claimed under Section 80D, 80DD, 80DDB, and 80U. The table below summarizes certain rules to claim tax benefits under the Income-tax act.
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