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What Is Section 80DD?

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.

What Are The Terms And Conditions To Claim Deduction Under Section 80DD?

  • The tax claimant must be an Indian resident whether he is an individual or belongs to a HUF.
  • Deduction can be claimed for a dependant of the taxpayer and not for the taxpayer himself.
  • The taxpayer cannot claim this deduction if the dependant has already claimed deduction under Section 80U for himself or herself.
  • Disabled dependents can include parents, siblings, spouse, and children.
  • The taxpayer should have paid for the medical expenses, support, and maintenance of the dependant with the medical disorder. Else, the taxpayer should have paid premium for a particular insurance policy designed for the disabled or the differently-abled people.

What Disabilities Are Considered Under 80DD?

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:

  • Mental disabilities and/or illness
  • Blindness or low vision
  • Hearing impairment
  • Locomotor disability
  • Autism
  • Cerebral palsy
  • Leprosy cured

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.

Section 80DD Limit

The amount of deduction that can be claimed under Section 80DD of the income tax act, 1961 is according to whether the dependant suffers from disability or severe disability.
  • A dependent person with disability is one who has at least 40% of any specified disorder. The family member who pays the medical bills of the person with disability can claim a tax deduction of up to Rs. 75,000.
  • A dependent person with severe disability should have at least 80% of this disability. A person who pays the medical charges for a person with severe disability can claim a tax deduction of up to Rs. 1,25,000.

What Are The Documents Necessary To Claim Tax Deduction Under Section 80DD?

The following documents have to be submitted to claim tax deduction under 80DD.

1. Self-declaration certificate: A self-declaration certificate has to be produced stating all the expenses made on the dependant. These expenses include the nursing, training, and rehabilitating expenses which are part of the medical treatment.

2. Form 10-IA: If the disabled dependant is affected by cerebral palsy, autism, or multiple disabilities, then Form 10-IA has to be submitted. Form 10IA must be signed duly by a medical authority as below.
  • A neurologist having an MD in Neurology (in case of children, a paediatric neurologist having an equivalent degree).
  • Civil surgeon or chief medical officer in a government hospital.

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.

How To Calculate 80DD Deduction Amount?

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?

Solution: Shankar fulfils the conditions required to claim 80DD deductions.
  • Shankar is a resident individual.
  • He is paying an amount towards the LIC scheme which is covered under deduction.
  • Sister comes under the category of disabled dependant.

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.

Conditions To Be Observed For Insurance or Deposit Amount For The Dependant To Be Eligible For Deduction Under Section 80DD?

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.

  • When the taxpayer dies, the plan should enable the payment of annuity or lump sum to the dependant.
  • The taxpayer must nominate the dependant or somebody else like a trust or another individual to receive the payment on the dependant’s behalf. This is because the dependant is disabled.

Difference Between Section 80U and Section 80DD

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.

Section 80DD, Section DDB, Section 80D, and Section 80U -Differences

80DD 80U80DDB80D
Terms and conditions of claimingMedical treatment of disabled dependentMedical treatment of disabled assesse (self)Medical treatment of self/dependant for specified diseasesMedical Insurance and Medical Expenditure
Amount of tax benefits that can be claimed75,000 for non-severe disability and 125,000 for severe disability75,000 for non-severe disability and 125,000 for severe disabilityAmount actually paid Or 40,000 for (age < 60) and 1,00,000 (age 60 or above)Maximum amount is capped at Rs. 1,00,000 subject to specific conditions

Conclusion

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.

FAQS

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.

Members of the family or parents below 60 yearsMembers of the family or parents above 60 years
Section 80DNot allowed Rs. 50,000
Section 80DDBRs. 40,000Rs. 1 Lakh
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