In India, the government made provisions to help people and families facing the challenges of disabilities. Section 80DD of the Income Tax Act is one such provision that offers financial relief to taxpayers who are caring for a dependent who is differently-abled.
What is Section 80DD?
Section 80DD provides tax deductions to individuals or Hindu Undivided Families (HUFs) who are responsible for the maintenance and care of differently-abled family members. Disabilities come in different varieties, like physical or mental challenges. This section aims to alleviate the financial burden that often accompanies the care of disabled dependents.
Who can claim a deduction under section 80DD?
To claim tax benefits under Section 80DD, you need to meet certain eligibility criteria:
- Resident Indian: You must be a resident Indian to avail of these deductions.
- Dependent with a Disability: The deduction is for a dependent who is differently-abled. It can be a spouse, children, parents, or siblings.
- Nature of Disability: The disability should be certified by a medical authority and fall under the categories specified in section 2(i) of the Persons of Disabilities Act, 1995. Autism, Cerebral Palsy, and Mental Retardation are some disabilities found in these categories.
- Dependent’s Maintenance: You should be responsible for the maintenance and care of the disabled dependent.
What is the maximum deduction allowed under Section 80DD?
The maximum deduction allowed under Section 80DD varies based on the severity of the disability:
- For disability of more than 40% and less than 80%: You can claim a deduction of ₹75,000 per year.
- For disability of more than 80%: You can claim a deduction of ₹1,25,000 per year.
Section 80DD allows fixed deductions regardless of actual expenses.
Example: Imagine someone has a family member with a 60% disability, and the law allows a tax deduction of ₹75,000. Even if they spent only ₹25,000 on the family member’s medical care, they can still get the full ₹75,000 deduction. The amount spent doesn’t affect the fixed deduction they can claim.
What are the Necessary Documents to Claim Tax Deduction Under Section 80DD?
To claim deductions under Section 80DD, you need to furnish certain documents:
- Medical Certificate: A medical certificate specifying the nature and extent of the disability is essential. This certificate should be issued by a medical authority recognised by the government.
- Form 10-IA: A duly filled and signed Form 10-IA is required to claim these deductions. You can get this form from the Income Tax Department’s official website.
- Self-Declaration Certificate: Taxpayers are required to furnish a self-declaration certificate detailing the expenditures associated with the medical care, encompassing nursing, rehabilitation, and training, for their dependent with a disability.
- Proof of Insurance Premium Payments: While a self-declaration certificate is typically adequate for substantiating most expenditures, it is essential to retain the original receipts when claiming expenses related to insurance policies obtained for the disabled dependent. These receipts serve as evidence of the incurred costs.
How to Claim Deductions Under Section 80DD?
To claim deductions under Section 80DD, follow these steps:
- Ensure that you have the necessary documents, including the medical certificate and Form 10-IA.
- Calculate the eligible deduction based on the severity of the disability.
- When filing your income tax return, provide the required details in the relevant section. Make sure to enter accurate information and attach the supporting documents.
- Keep copies of all documents and receipts as proof for future reference.
Who issues medical certificates for disabled dependents?
The responsibility for issuing a medical certificate for a dependent with a disability can fall upon the following medical authorities:
- Civil Surgeon or Chief Medical Officer (CMO) at a government hospital.
- A Neurologist with a MD (Doctor of Medicine) degree in Neurology.
- For children with disabilities, a Pediatric Neurologist with an equivalent degree.
These medical professionals are authorised to assess and certify an individual’s disability status based on their medical expertise and knowledge of the specific condition.
Final Words
Section 80DD is a beneficial provision in the Indian Income Tax Act that offers financial relief to those caring for disabled dependents. Knowing the eligibility requirements, the maximum deduction limits, and the necessary paperwork can enable you to take full advantage of these tax benefits. Always consult with a tax professional or accountant for personalised guidance on claiming deductions under Section 80DD.