Deduction 80DD: Medical Treatment of Disabled Dependent

Deduction 80DD: Under Section 80DD, individuals or HUFs are permitted to deduct expenses for dependants who are differently abled and who are entirely dependent on them for support and maintenance. A deduction is available to families of disabled persons to support a disabled dependent.

The families of disabled dependents can claim deductions under Section 80DD rather than the dependents themselves. Individuals and HUFs caring for disabled dependents can also claim Section 80DD. Care expenses for disabled dependents are eligible for deductions. Deductions will also be made for insurance premiums paid to specific insurers so that disabled dependents can be maintained.

As we discussed earlier, there are deductions under sections 80C, 80D, 80CCC, 80CCD, and other deductions. This article will discuss deductions under section 80DD for medical treatment or expenses for handicapped dependents’ maintenance.

What is Deduction u/s 80DD?

Medical treatment for a handicapped dependent is deductible under section 80DD. To claim this deduction, you must meet the following conditions:

  • Expenditures incurred for medical treatment (including nursing), training, and rehabilitation of dependents with disabilities.
  • The amount was paid/deposited under a scheme approved by CBDT that was framed by the Life Insurance Corporation, Unit Trust of India, or any other insurance company that offered a policy specifically designed to provide care for the dependent.

Section 80DD does not apply to taxpayers claiming tax under Section 80U.

Conditions to Claim Deduction u/s 80DD

The following conditions must be satisfied to claim the deduction u/s 80DD.

  1. An individual’s dependent can be any family member, such as his or her spouse, children, parents, and siblings. For HUF, dependents can include any member. Disabled individuals who are totally or mostly dependent on their assessee can be considered to be dependent.
  2. If you have any one or more handicapped dependents and you incurred any expenditure related to his/her medical treatment, training, and rehabilitation, including nursing.
  3. This deduction is not available to NRIs.
  4. Under this section, taxpayers cannot claim deduction under section 80DD medical expenses for themselves.
  5. In addition to medical treatment, LIC or another insurer may require a deposit of any amount to treat dependents.
  6. A copy of the certificate (Form 10IA) issued by the medical authority should be provided by the assessee when claiming a deduction under this section.

Who are Dependents u/s 80DD?

For section 80DD, a dependent is defined as a spouse, child, sibling, parent, or member of a HUF. The individuals above must be entirely or largely dependent upon the taxpayer to claim the deduction.

How does 80DD define “disability”?

A “Person with Disability” is defined as someone suffering from 40% disability, as certified by a credible medical authority.

A person with disabilities is defined as a person with a disability under Section 80DD according to the “Persons with Disabilities Act, 1995,” which entails autism, cerebral palsy, mental retardation, and multiple disabilities that are covered by the “National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities Act of 1999.”

There are various diseases covered by section 80DD, i.e., Autism, Blindness, Cerebral Palsy, Hearing impairment, Leprosy Cured, Loco-motor disability, Low vision, Mental illness, and Mental retardation.

Max Amount of Deduction u/s 80DD

If the disabled dependent’s expenses are less than the mentioned amount, the full deduction can be claimed under Section 80DD.

  • As per the provision of section 80DD, the amount is allowed up to Rs.75,000 for people with normal disabilities (i.e., at least 40%) in aggregate.
  • The deduction can be claimed up to Rs.1,25,000 if the person has a severe disability (i.e., 80% or more).

What is Disability:  If the disability is over 40% as per the Person with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995,, it is treated under section 80DD.

What is severe disability? If a person’s disability is over 80%, as per the Disability Act, 1995, then it is treated as severe disability under section 80DD.

What if a disabled dependent dies?

As the deduction is allowed only for dependent handicapped persons. So, the amount deposited in any approved insurance scheme is purely for the benefit of the disabled person.  So you have to clear one thing: that person with a disability should have a nominee or any other person or the trust to receive the payment under the scheme for the benefit of the handicapped dependent, and in the event of death, the amount of annuity or any lump-sum should be paid for the benefit of the handicapped person.

In case the handicapped dependent predeceases the sub-scriber assessee, the amount for which deduction has been claimed shall be deemed the assessee’s income for the previous year in which such amount is received.

Important Circulars 

  • According to circular no.702, dated 3rd April 2015, the deduction is allowable in full if the conditions mentioned are fulfilled.
  • Another important circular no. 775 dated 26th March 1999, the employee needs only to furnish a medical certificate from a Govt. Hospital and a declaration in writing duly signed certifying the actual amount of expenditure on account of medical treatment, etc, of the handicapped dependent and receipt for the amount paid or deposited in the scheme of LIC/UTI, then the deduction shall be allowable. Therefore, DDOs may not insist on the employees’ production of vouchers or any bills.

Difference Between 80DD, 80D, 80DDB and 80U?

The 80DD, 80D, 80DDB, and 80U deductions related to medical treatment and insurance may confuse some people. You can get a better understanding of these deductions by comparing these sections. Let’s take a look at the comparison.

80DD 80D 80DDB 80U
Explanation Tax deduction for medical treatment of disabled dependent Mediclaim for medical insurance of self, spouse, children, parents Medical treatment of self/dependant for specified diseases Medical treatment of disabled assessee (self)
Max Amount Deduction Rs.75,000 with normal disability  (i.e. at least 40%)
Rs.1,25,000 if the person with severe disability (i.e. 80% or more)
Rs. 25,000 (Below Age 60)
Rs.50,000 (60 Years or Above )
Rs. 40,000 (Below age 60)
Rs. 1,00,000 (60 Years or above)
Max up to 1,00,000

2 thoughts on “Deduction 80DD: Medical Treatment of Disabled Dependent”

  1. Who is the competent authority to decide the % f disability of a person.My mother is aged 85 yrs her leg at hip joint was fractured and she is unable to walk.Pl clarify who is competent to say she is disabled.Her fracture was treated in a pvt hospital about19 yrs back

    Reply

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