Deduction u/s 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 under Section 80DD. A deduction is available to families of disabled persons under Section 80DD in order 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 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 have discussed earlier deductions under sections 80C, 80D, 80CCC, 80CCD and other deductions. In this article, we’ll 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. In order 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 is not applicable to taxpayers who already claim tax under Section 80U.
Conditions to Claim Deduction u/s 80DD
The following conditions must be satisfied to claim the deduction u/s 80DD.
- 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.
- 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.
- This deduction is not available to NRIs.
- Under this section, taxpayers cannot claim deduction under section 80DD medical expenses for themselves.
- In addition to medical treatment, LIC or another insurer may require a deposit of any amount for the treatment of dependents.
- 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?
A dependent is defined as a spouse, child, sibling, parent, or member of a HUF for the purpose of section 80DD. The individuals above must be entirely or largely dependent upon the taxpayer in order to claim the deduction.
How does 80DD define “disability”?
A “Person with Disability” is defined as a person 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, Mental retardation.
Max Amount of Deduction u/s 80DD
If the disabled dependent’s actual 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 with normal disability (i.e. at least 40%) in aggregate.
- The deduction can be claimed up to Rs.1,25,000 if the person with 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 then it is treated under section 80DD.
What is Severe Disability: If the 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 person with a disability. 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 to be the income of the assessee for the previous year in which such amount is received.
- 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 need 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 upon the production of vouchers or any bills by the employees.
Difference Between 80DD, 80D, 80DDB and 80U?
The 80DD, 80D, 80DDB, and 80U deductions related to medical treatment and medical insurance may be confusing to some people. You can get a better understanding of these deductions by comparing these sections. Let’s take a look at the comparison.
|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