Understanding Section 80DD: An Overview
Section 80DD is introduced to providethe tax benefits to the caretakers of disabled dependents. The disabilities covered under the act include blindness, low vision, leprosy-cured, loco motor disability, hearing impairment and mental retardation.
Deduction Limits Under Section 80DD
Any individual or HUF can claim the benefits of section 80DD. Section 80DD can allow the deduction to only families of disabled dependents the same is not eligible for the disabled themselves. There is different section for claiming a deduction for self which is section 80U.
Any person claiming a deduction of any amount in section 80U cannot be claimed the same amount again in section 80DD. Section 80DD is applicable on all the expenses incurred to caring the disabled dependent. The expenses include the insurance premium also which is paid for the purpose of maintenance of disabled dependent.
To availed such deduction individual is required to submit the medical certificate authenticating the disability of dependent issued by the state or central government medical board.
The amount of deduction to any person is allowed on the basis of percentage of disability of a disabled dependent i: e if the percentage is 40% or more of one more disability the deduction is allowed up to Rs 75000/-
The amount of deduction allowed will be 1, 25,000/- if the person is 80% or more of one or more disabled.
The above deduction limits have been increased from assessment year 2015-16 and Earlier it was 50000/- and 100000/- respectively.
The deduction is allowed only to the individual who have a disabled dependent including parent, spouse, siblings, or children or an HUF with a disabled family member can claim deduction under section 80DD. The section is not eligible for the NRI.
Types of Disabilities Covered under Section 80DD
- Disability: This refers to a condition recognized as a disability under the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. It includes conditions such as blindness, low vision, hearing impairment, locomotor disability, mental illness, autism, cerebral palsy, and multiple disabilities.
- Severe Disability: This refers to a higher degree of disability as defined under the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. It includes conditions such as blindness, severe visual impairment, hearing impairment, locomotor disability, and mental illness.
It’s important to note that the disabilities mentioned above are those recognized and defined by the relevant laws and regulations in India. The specific conditions and criteria for disabilities may vary based on the applicable legislation and guidelines.
To claim deductions under Section 80DD, the disability must be certified by the appropriate medical authority as specified by the government. The certificate should contain the necessary details about the disability and its extent, as per the prescribed format.
It’s advisable to consult with a tax professional or refer to the official guidelines provided by the income tax department for accurate and up-to-date information specific to your situation.
Eligibility Criteria for Claiming Deductions under Section 80DD
To claim deductions under Section 80DD of the Income Tax Act for medical expenses of disabled dependents, you need to meet the following eligibility criteria:
- Resident Individual: Only resident individuals, whether they are employees or self-employed, are eligible to claim deductions under Section 80DD.
- Dependent with Disability: The deduction can be claimed for a dependent with a disability who can be any of the following:
- Children (including adult children)
- Siblings (in case the individual has no spouse, children, or parents)
- Disability Certificate: You must possess a valid disability certificate issued by a prescribed medical authority. The certificate should clearly mention the type and extent of disability.
- Financial Dependency: The disabled dependent must be financially dependent on you. It means that the disabled individual should not have an annual income exceeding the specified limit, which is currently set at Rs. 3 lakhs per annum. However, if the disabled dependent engages in any income-generating activity due to their disability, they can still be considered dependent if their income is below the threshold.
- Amount of Deduction: The amount of deduction you can claim depends on the extent of disability:
- For disability: A fixed deduction of Rs. 75,000 can be claimed.
- For severe disability: A higher deduction of Rs. 1,25,000 can be claimed.
It’s important to note that to claim deductions under Section 80DD, you need to fulfill all the mentioned criteria. The deduction can be claimed by filing your income tax return and providing the necessary details and documents.
It’s recommended to consult with a tax professional or refer to the official guidelines provided by the income tax department for accurate and up-to-date information specific to your situation.