Section 80DD of the Income Tax Act, 1961, offers tax deductions to resident individuals and Hindu Undivided Families (HUFs) who incur expenses on the medical treatment, training, or rehabilitation of a dependent with a disability. It also covers premiums paid for specific insurance policies designed for the maintenance of such dependents.
Eligibility Criteria
To claim deductions under Section 80DD:
- Resident Status: You must be a resident individual or part of a HUF. Non-resident Indians (NRIs) are not eligible.
- Dependent Relationship:
- For individuals: Spouse, children, parents, brothers, or sisters.
- For HUFs: Any member of the HUF.
- Dependency: The disabled person should be wholly or mainly dependent on you for support and maintenance and should not have claimed deduction under Section 80U.
Deduction Limits
The deduction amount is fixed, irrespective of actual expenses:
- Disability (40% to 79%): ₹75,000 per annum.
- Severe Disability (80% or more): ₹1,25,000 per annum.
Disabilities Covered
Deductions under Section 80DD apply to dependents with the following disabilities:
- Blindness
- Low vision
- Hearing impairment
- Leprosy-cured
- Locomotor disability
- Mental retardation
- Mental illness
- Autism
- Cerebral palsy
- Multiple disabilities
Required Documents
To claim the deduction:
- Medical Certificate: Obtain from a government hospital’s Civil Surgeon, Chief Medical Officer (CMO), or a certified neurologist.
- Form 10-IA: Required if the dependent has autism, cerebral palsy, or multiple disabilities.
- Self-Declaration Certificate: Stating expenses incurred on medical treatment, including nursing, rehabilitation, and training.
- Insurance Premium Receipts: If claiming expenses for insurance policies taken for the disabled dependent.
How to Claim the Deduction
- Obtain Necessary Documents: Ensure you have the medical certificate, Form 10-IA (if applicable), self-declaration, and insurance receipts.
- File Income Tax Return: While filing, include the deduction under Section 80DD.
- Maintain Records: Keep all documents safely, as they may be required for verification by the Income Tax Department.
Important Notes
- No Double Deductions: If the disabled dependent has already claimed a deduction under Section 80U, you cannot claim under Section 80DD for the same individual.
- Taxability on Death: If the disabled dependent passes away and you receive any funds from an insurance policy, those proceeds are subject to income tax based on the relevant tax brackets.
By understanding and utilizing Section 80DD, you can ensure financial support for your disabled dependents while availing tax benefits. Always consult with a tax professional or refer to the official Income Tax guidelines for detailed information.
