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Section 80U of the Income Tax Act,1961 deals with deductions offered to disabled persons and their caretakers. Taking care of family members with special needs can be challenging both emotionally and financially. Thankfully when it comes to financial matters, tax laws provide certain benefits in the form of deductions from total income to provide relief to both the caregiver as well as the disabled person. There are certain sections under the income tax laws which provide tax deductions to individuals if they or any of their family members suffer from specified disabilities.

section 80U offers tax benefits for individuals suffering from a disability, whereas Section 80DDB offers tax benefits if an individual taxpayer’s dependent family members suffer from any disability.

Who Can Claim Deduction under Section 80U?

Any resident individual who has been certified as a person with a disability by any medical authority is eligible to claim a deduction under Section 80U. For this section, a person with a disability is defined as a person having at least 40 percent disability, certified by any medical authority.

Also, for this section disability is defined as any of the following:

  • Blindness
  • Low vision
  • Leprosy cured
  • Hearing-impaired
  • Locomotor disability
  • Mental retardation
  • Mental illness

This section also defines severe disability which refers to a condition where the disability is 80 percent or more. Such disabilities include multiple disabilities, autism, and cerebral palsy.

What is the Quantum of Deduction under Section 80U?

A deduction of Rs 75000 is allowed for persons with disabilities whereas a deduction of Rs 1, 25,000 can be availed by persons with severe disabilities.

What are the Requirements to claim Deduction under Section 80U?

No other documentation other than a certificate from a recognized medical authority, in Form 10A, is required. There is no requirement of producing any bills for costs incurred in pursuance of treatment or such other expenses.

For making any claim under this section, a medical certificate is required to be submitted along with the income tax return as per section 139 for the relevant AY. In case the disability certificate expires during the year, one would still be able to claim for the year in which it expires. However, a fresh certificate would be required from the succeeding year to claim the benefits under Section 80U.

The recognized medical authority for this section could either be a neurologist having a degree in medicine (MD) in neurology or a civil surgeon or Chief Medical Officer in a government hospital.

If the disability is temporary and requires reassessment after a certain period, then the validity starts from the assessment year relevant to the financial year in which it was issued and ends during the assessment year relevant to the previous year in which the certificate expires.

What is the difference between Section 80U and Section 80DD?

Section 80DD provides tax deductions to the family members of a taxpayer, whereas Section 80U provides deductions to the taxpayer himself with a disability.

Section 80DD is applicable if a taxpayer deposits a specified amount as an insurance premium for taking care of a disabled dependent family member. Section 80U also provides similar deduction limits and dependents under this section shall include the siblings, parents, spouse, children, or any member of a Hindu Undivided Family (HUF), of which the assessee is a member.

Budget 2022 has proposed a new tax benefit for the parents of the disabled. As per the proposed tax sop, if the parent/ guardian bought a savings life insurance policy with the latter as the beneficiary then the parent/ guardian would be eligible to claim a deduction before tax subject to certain conditions. Further, this sop can be claimed even in cases where the policy benefits/ payouts start while the buyer of the policy is still alive.

Also for persons opting for the new regime, none of the tax deductions stated above or under the provisions of the act shall be available.

What should be mentioned in the Certificate?

  • Name and age of the patient
  • Name of the parent
  • Address
  • Description of the ailment
  • Whether the disability is progressive/non-progressive
  • Qualification of the specialist issuing the prescription
  • Name and address of the institution or government hospital
  • Signature of the patient and the specialist

How are disabilities categorized under the Section?

  • Low vision: Vision impairment that can’t be corrected by surgery but the patients are still able to use their vision with the help of devices
  • Blindness: It is defined as the complete absence of sight or when the field of vision gets limited by an angle of 20 degrees or the visual accuracy is lesser than 6160 after the use of corrective lenses.
  • Hearing impairment: Hearing power loss of a minimum of 60 decibels.
  • Leprosy cured: Those individuals that have been cured of leprosy but the sensations in feet and hands are lost or any older aged person with extreme deformities that obstructs them from engaging in any beneficial occupation.
  • Mental Retardation: People who have incomplete development of mental capacities resulting in low intelligence levels.
  • Locomotor disability: Individuals who get affected with limitations of movements due to disability of joint muscles or bones.
  • Mental Illness: Mental disorders not related to retarded mental health.

Section 80U and Section 80DDB

Section 80DDB also offers a tax deduction to taxpayers who are incurring expenses for medical treatment of specified diseases. This section also is inserted with a cause to help the patients avail a deduction since the expenses incurred can be pinching the pockets of the common man. The government has taken these measures for the betterment of the public at large.

FAQS

1. When can an individual claim a deduction under Section 80U?

An individual who has a prescribed disability with 40% or 80% disability is eligible to claim a deduction under the Income Tax Act.

2. How can an individual claim the deduction under Section 80U?

An individual or a person with disabilities can claim the deduction while reporting his income in an income tax return.

3. What certificates should be furnished to claim the deduction?

An individual should furnish a medical certificate from a recognized medical authority along with the income tax return. The certificate should state the type of disability.

4. What is the amount of deduction under Section 80U?

The total amount of deduction available to a disabled individual is Rs 75,000. In the case of a severe disability, the deduction is enhanced to Rs 1, 25,000.

5. Is the deduction available to NRIs?

No, deductions under this section are allowable only for Indian citizens.

6. Is the deduction amount based on actual expenditure?

No, the deduction is allowable at a flat rate irrespective of the expenses incurred in treatment or maintenance of the disability.

7. What are the documents required under Section 80U?

A copy of the certificate from a recognised medical authority in Form 10A for certifying a person with a disability or severe disability is required.

8. Who can certify a disabled person?

Medical Authorities under this section include:

  • A civil surgeon or Chief Medical officer of a government hospital
  • A neurologist with MD in Neurology
  • A pediatric neurologist with an MD in Neurology in the case of children.
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