Disabled person can claim up to Rs 1,25,000 tax deduction

Taking care of a family member with special needs can be challenging both emotionally as well as financially. Thankfully, when it comes to financial matters, tax laws provide certain benefits to ease some pain of both the caregiver as well as the differently-abled person.

Balwant Jain, chartered accountant and investment expert, says, "Section 80U of the Income-Tax Act gives tax benefits to individuals who have disability, while Section 80DD to an individual who supports a family member or dependant with disability. Not many are aware of both these benefits."

For those with disability:

Jain says, "Tax benefits under Section 80U apply only for certain disabilities as described by the tax rules." Blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism and cerebral palsy are the disabilities that are eligible. Tax benefits are available to any resident individual who is certified as "a person with disability" by the medical authorities ___ chief medical officer of a government hospital, or a neurologist with an MD in Neurology, or paediatric neurologist in case of children. For deduction under section 80U, individuals or persons with disability are categorised into two types - person with disability and person with severe disability.

Gopal Bohra, partner, NA Shah Associates LLP, says, "Section 80U provides deductions to the resident individual taxpayer suffering from a disability as certified by a prescribed medical authority. An individual can claim a deduction of Rs 75,000 for normal disability and Rs 1,25,000 for severe disability. Severe disability means a person suffering from 80% or more of one or more of the above disabilities."

Keep in mind that the certificate can be obtained from prescribed medical authority by filling Form 10-IA. In the certificate, the medical authority is required to specify the severeness of the disability and recommended the period after which reassessment to be done, if any.

Bohra says, "Section 80U requires the taxpayer to submit the certificate along with the return of income. However, in the e-filing era, the taxpayer does not have the option to attach any file along with the return of income but shall obtain the certificate before filing the return so that the same can be produced before the tax authorities whenever required." One important thing to keep in mind is that if the condition of disability is temporary and requires reassessment after a specified period, the certificate is valid only for a specific period stated as per tax rules.

For caretakers of a person with disability:

Borah a says, "Under section 80DD a resident individual or Hindu Undivided Family (HUF) can claim deduction of Rs 75,000 (normal) or Rs 1,25,000 (severe) on any expenditure incurred on medical treatment (including nursing) or rehabilitation or paid under an approved scheme for the maintenance of dependent who is suffering from normal disability or severe disability respectively."

Dependent under section 80DD refers to the brothers and sisters of the assessee, parents, spouse, children or in case of HUF, a member of a Hindu Undivided Family, and disability of the dependant is not less than 40%. These deductions are allowed irrespective of your actual expenditure. This deduction is not available to non-resident Indians (NRI). A medical certificate is mandatory to claim the deduction with respect to the mentioned disabilities from any government hospital. The disabilities which qualify for tax benefits under Section 80DD of the Income Tax Act include blindness, locomotor disability, low vision, mental illness, mental retardation, leprosy-cured, hearing impairment, cerebral palsy and autism.

Borah says, "In case the resident individual is suffering from disability and also incurring expenditure on a disabled dependent, then such resident individual can claim deduction for himself under section 80U and for the dependent under section 80DD."

However, remember that the taxpayer is not allowed this deduction if the dependent has claimed a deduction under section 80U for himself/herself.

SOME SUPPORT

• Rs 75,000 – Deduction for normal disability under Sections 80U and 80DD
   
• Rs 1,25,000 – Deduction for severe disability under both the sections
   
• Requirement under 80U (For those with disability) – A certificate from prescribed medical authority by filling Form 10-IA
   
• Requirement under 80DD (For caregivers) – A medical certificate from any government hospital

WHAT TO KEEP IN MIND

• If the condition of disability is temporary and requires reassessment after a specified period, the certificate obtained after filling the Form 10-IA is valid only for a specific period stated as per tax rules
   
• Dependent under 80DD refers to the brothers and sisters of the assessee, parents, spouse, children or in case of HUF, a member of a HUF, and disability of the dependant is not less than 40%