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Regular post-retirement income | Additional tax benefit on investments up to ₹50,000 u/s 80CCD (1B) - EEE Category | Regulated by PFRDA (Pension fund regulator under Ministry of Finance, Govt. of India)

When it comes to healthcare, the costs are rising at an exponential rate and affording basic medical care is now a luxury. Added to that is the financial stress exerted by disabilities which come with various requirements such as treatments, surgeries, consultations, checkups, support items, etc. This can immensely burden a caretaker who is financially responsible for their disabled dependent’s medical needs. 

Hence, the Government of India has introduced Section 80DD of the Income Tax Act of 1961 which offers support to such caretakers. The support is provided through flat tax exemptions and benefits depending on their disabled dependent’s disability degree. 

What is Section 80DD of the IT Act?

Section 80DD of the Income Tax Act of 1961 helps caretakers and those responsible for the wellbeing of dependent family members who are disabled. The caretaker is liable to flat-out tax deduction regardless of how high or low their income is as per Section 80DD of the Income Tax Act of 1961. This is essentially to ease the stress surrounding special medical requirements, nursing requirements, training, pharmaceutical needs, and more. 

The deductions under this section include exemptions for expenses borne for medical treatments and deposited amounts under a scheme. The main intent of Section 80DD is to provide a sense of financial relief for those tirelessly looking after disabled loved ones who require special attention and have special needs.  

Definitions Under Section 80DD

Since Section 80DD is a crucial part of the Income Tax Act for those looking for monetary relief when it comes to their responsibilities surrounding their disabled family members, understanding the definitions of certain terms is a prerequisite for all. Given below are vital terms and their subsequent definitions of Section 80DD of the Income Tax Act of 1961.

  • Disabled Dependent

Disabled Dependants can include family members such as spouses, children, siblings and parents. This is applicable to individuals and to Hindu Undivided Families (HUFs). It is necessary for the disabled individual to be fully or majorly dependent on the tax-payer for their needs and wellbeing. However, if you have already claimed the deductions under Section 80U, you are ineligible for Section 80DD. 

  • Disability

The definition of disability is similar to the one given under the Persons With Disabilities Act of 1995. This includes cerebral palsy, autism, blindness, hearing impairments, etc. A certified medical authority is required to provide the tax authority with a credible certificate that states 40% suffering when it comes to the condition of the disabled dependent in question. 

Who Is Covered Under Section 80DD?

When it comes to the dependent disabled individuals stated under Section 80DD of the Income Tax Act, certain conditions of disabilities are covered under this section. All these conditions are explained below in detail as per the disabled dependents defined in Section 80DD of the Income Tax Act of 1961. 

  • People with Autism Spectrum Disorder

According to the Rehabilitation Council of India, more than 2,160,000 individuals in India belong on the autism spectrum. Autism Spectrum Disorder brings about various needs, medically, financially and psychologically, that the caretaker or the individual responsible have to fulfil and uphold. 

Hence, Section 80DD of the Income Tax Act of 1961 allows the caretakers of people with autism spectrum disorder to gain some financial support through deductions and exemptions. 

  • Suffering From Blindness

The National Medical Journal of India carried out a systematic review and meta analysis of the prevalence of blindness in India and it was found that approximately 8 million individuals in India suffer from blindness as of December 15, 2020. From the perspective of special care, medical treatments and support modifications, it can be realised that the costs of caring for a blind individual can be financially stressful, and hence, Section 80DD allows those caretakers to be exempt of certain deductions and taxes to be able to incur those expenses with ease. 

  • Individuals with Hearing Impairments

A study carried out in 2022, by the National Medical Journal of India, found almost a 100 million people suffering from hearing impairments which brought attention to the extremely high expenditure incurred by a hearing impaired individual’s guardian or caretaker. 

Added with that are the ever rising costs of healthcare and support equipment, and hence, to help a hearing impaired disabled dependent access the right treatment and support, Section 80DD allows certain tax exemptions to the caretaker of the disabled dependent. 

  • People with Loco-motor Disabilities

As of March 2021, 1.4%of the Indian population suffers from loco-motor disabilities according to a report created by the National Handicapped Finance and Development Corporation of India. This includes cure-leprosy, muscle dystrophy, cerebral palsy, etc. The basic requirements of individuals suffering from such issues comprise support items, domestic modification, medical treatment and, in several cases, surgical necessities. 

Such needs can give rise of expenses that could be too high a price to bear for the person financially responsible for the disabled dependent and hence, they are given exemptions and deductions in order to compensate for those expenses. 

  • Individuals with Mental Disorders

According to an exhaustive research carried out by the Ministry of Health and Family Welfare of India as part of the National Mental Health Programme, about 6% to 7% of the Indian population as of 2020 suffer from a mental disorder. 

With an added burden of stigma attached to the concept of mental disorders and illnesses, the costs of treating mental disorders are very high and it can get very difficult for the dependent and their family to manage those expenses. Hence, this section allows them an advantage over rising treatment and healthcare costs.

  • People with Impaired Vision

In December of 2020, 62 million people were found to be visually impaired in the country as per the National Medical Journal of India. Such conditions require treatments, surgeries, constant medical consultations and many more fundamentals which can cause a great deal of financial stress to the family and especially the first person responsible for the disabled dependent. Hence, Section 80DD provides individuals and HUFs with special exemptions and deductions to lighten the stress by a considerable margin. 

Deductions Under Section 80D

Most sections provide deductions that differ on the basis of age, gender, income groups and more. However, Section 80DD provides qualified individuals with a fixed deduction, no matter the age or income group. An explanation of the deductions is as follows. 

  • 40% Disability

With a medical practitioner’s certified statement that asserts 40% and above (normal disability) on the medical scale when it comes to disabilities, a caretaker may get a deduction on taxes up to ₹75,000 regardless of their age or income. 

  • 80% Disability

Should the disability certificate state the disability severity to be 80% and above (severe disability), the first person responsible for the expenses of the disabled dependent can apply for a tax-exemption of up to ₹1,25,000. 

 

Disability Percentage

Deduction

40% and above (normal)

₹75,000

80% and above (severe)

₹1,25,000

 

The Income Tax Department’s official website provides you with a calculator that can help you calculate the deduction you are entitled to under Section 80DD. Once you have filled the fields required, you will be able to see the exemption amount derived for you by the calculator. 

How to Claim Deductions under Section 80DD

The process of claiming deductions under Section 80DD of the Income Tax Act of 1961 begins before the commencement of your ITR e-filing. It begins with identifying whether the dependent suffers from a disorder, disability, impairment or impediment stated under the section. 

Next would be acquiring the medical certificate that determines the extent of the disability of the dependent. You can acquire this from a government hospital, preferably, through a certified medical practitioner as stated previously. 

Here’s where you start to fill Form 10A. This form is designed specifically to cater to Section 80DD and Section 80U claimants. You can submit this form along with a Self Declaration and your dependent’s Medical Certificate during ITR filing. 

If you have filed your ITR online, you will be required to visit the Income Tax Office where you can submit a copy of your e-acknowledgement and a cover letter. 

Documents Required for Section 80DD

If you wish to claim any deductions under Section 80DD of the Income Tax Act of 1961, you have to furnish a special form named Form 10IA. This form is specifically used to claim deductions of such nature which are stated under Section 80DD as well as Section 80U. 

Along with Form 10IA, you are also required to provide a self-declaration, ITR papers and a medical certificate which asserts the extent of the dependent individual’s disability. You can acquire this medical certificate from the CMO (Chief Medical Officer) or Civil Surgeon of a government hospital, a paediatric neurologist or a general neurologist. 

With these steps covered, you can provide other personal and financial documents required for 80DD along with your dependent’s medical certificate, your ITR papers and Form 10IA. However, it is important to note that individuals who have already applied for deductions under Section 80U cannot claim for the exemptions offered by Section 80DD of the Income Tax Act of 1961. 

Terms and Conditions of Section 80DD

Section 80DD is applicable to insurances and schemes that cater specifically to the wellbeing and caring of disabled dependents. For the deposit amount or the sum insured, one must keep the following points in mind. 

  • In the event of the caretaker’s death, it is the insured’s or the disabled dependent’s right to be the prime nominee of the sum insured or the deposit amount.

  • The scheme or insurance should also provide the option of handing over the responsibility of the insurance to the first caretaker in line in the event of the prime caretaker’s death. 

  • As per the Budget of 2022, an amendment could be made wherein deductions could be applied if the annuity or the lump sum insured could be made accessible to the disabled dependent upon maturing to the age of 60 years, regardless of the demise or existence of a subscriber or caretaker. 

Taxability on Amount Received upon Death of Dependent

There have been cases wherein the disabled dependent passes away before the prime caretaker does. In such instances the amount that is deposited in the insurance or scheme will be considered as the tax-payer’s income during the year in which that amount is received. 

Differences Between Section 80U and Section 80DD

Section 80U and Section 80DD could be considered sister-sections since both cater to tax deductions for the welfare of the disabled dependents of this country for them to be able to receive adequate health care and medical treatment. However, both sections harbour minor differences when compared and a comparison of both is given below. 

 

Section 80U

Section 80DD

The disabled dependent can claim tax deductions.

The caretaker of the disabled dependent can claim tax deductions. 

Since the disabled individual is considered the taxpayer that is liable to deductions, they are considered as the primary expense-bearer.

The tax-paying caretaker bears all the medical expenses involved in the treatment and health care of the disabled dependent. 

 

Please note that when it comes to other features and terms such as the various disabilities considered and the nature of deducting tax, no major changes exist between Section 80U and Section 80DD. 

Differences Between Section 80DD, Section DDB, Section 80D and Section 80U

Section 80DD allows individuals and HUFs to claim tax deduction and benefits for the expenses they bear in order to fulfil their disabled dependent’s medical needs. Section 80D allows a tax-payer to claim tax benefits for premiums paid for health insurance and expenses incurred for preventive check-ups carried out for dependent family members such as your spouse, children, parents and a disabled dependent. 

Section 80DDB supports a tax-payer or dependent undergoing medical treatment for certain illnesses and ailments specified in the section itself through tax benefits. Section 80U highlights the disabled individual as the primary tax-payer and provides them with a flat tax deduction regardless of the amount incurred as expenses. 

 

Section 80DD

Section 80DDB

Section 80D

Section 80U

Medical needs and treatment for disabled dependents.

Medical treatment requirements for oneself or a dependent for certain disease specified. 

Health insurance and preventive medical expenses.

Expenses for medical requirements incurred directly by the disabled assessee.

  • Normal (40% disability): ₹75,000


  • Severe (80% disability): ₹1,25,000

  • Amount paid


  • Below 60 years of age: ₹40,000


  • Above 60 years of age: ₹1,25,000

  • Up to ₹1 Lakh for specific conditions.

  • Normal (40% disability): ₹75,000


  • Severe (80% disability): ₹1,25,000

FAQs

✔️Is there a tool that can help me calculate my deductions as per Section 80DD?

Yes, there is a tool that can help you compute the deductions you are entitled to under Section 80DD of the Income Tax Act of 1961. You may visit the tax exemption calculator provided by the Income Tax Department of India which calculates your tax benefits on the basis of the section, the severity of the disability, the residency status, etc.

✔️Where can I get a disability certificate from?

The disability certificate is one of the most important documents you are required to provide in order to access the tax exemptions stated under Section 80DD of the Income Tax Act of 1961 since the exemption limit depends on the severity of the disabled dependent’s condition. You can acquire a disability certificate from a government certified hospital with the diagnosis and analysis of a CMO or a Civil Surgeon.

✔️Is cerebral palsy included under Section 80DD?

Yes, along with other disabilities, cerebral palsy is a condition that is considered for tax exemptions under Section 80DD. 

✔️Are ITR papers required for applying for deductions under Section 80DD?

Yes, ITR papers are very important when it comes to applying for the tax benefits provided under Section 80DD of the Income Tax Act of 1961. Along with this, you are required to submit Form 10IA and a credible medical certificate that states the severity of the disabled dependent’s condition. 

✔️Is Section 80U and Section 80DD the same?

Section 80U and Section 80DD are very similar; however, they differ from each other when it comes to their definitions. While both provide similar tax exemptions, Section 80U holds the disabled individual as assessee and Section 80DD considers the caretaker of the disabled dependent as the assessee.

✔️What is the Section 80DD deduction limit?

The Section 80DD deduction limit depends on the severity of your disabled dependent’s condition. If the medical certificate states the condition as 40% and above (normal), you are eligible for ₹75,000, and in the case of 80% and above (severe), you are eligible for ₹1,25,000.