In the last few years, the cost of medical treatment has been on the rise and is only set to go higher. With the intent to give some relief to working-class individuals shelling out large sums of money on healthcare, especially differently-abled and disabled individuals, the Government of India has provided tax benefits under Section 80DD of the Income Tax Act.
Indian citizens, under Section 80DD of the Income Tax Act, 1961, are eligible to claim tax deductions. Deductions can be claimed by Indian citizens and ‘Hindu Undivided Families’ for the clinical treatment of a dependent family member who is disabled or differently-abled. This deduction amount also extends to the insurance premium that is paid towards a specific insurance plan for a dependent that is disabled or differently-abled.
Let us go through the details to know more about deductions under section 80DD.
As is with other sections of the Income Tax Act, there are specific terms and conditions for tax deduction under Section 80DD too. If these conditions are found to be non-applicable, tax benefits could be withdrawn from the taxpayer.
The taxpayer cannot claim the deduction for expenses incurred on himself/herself. The expenses should have been incurred on behalf of their dependent, disabled family member.
The dependents can be the spouse, brother, sister, parents, or children of the taxpayer.
If the dependent has already claimed a deduction for themselves under section 80U, the taxpayer is ineligible to claim deductions on behalf of the dependant.
To avail of this deduction, it is important that the taxpayer has borne the expenses of the dependent for medical care, treatment, training, and rehabilitation, or the taxpayer has paid premiums against medical insurance for the dependent.
It is pertinent that the disability is as described under Section 2(i) of 1995, Disability Act and at least at 40%
To claim deductions under section 80DD, one must meet the following criteria:
An individual Indian resident or a member of an HUF
Individuals not residing in India (NRIs) cannot claim for these deductions
Disorders, as defined under Section 2(i) of 1995, Disability Act, and Section 2, clause (a), (c), (h) of Multiple Disabilities Act, 1999 are covered under Section 80DD.
The following disabilities are defined for tax deduction under section 80DD:
Mental retardation/intellectual disability
Impairment of hearing
To claim deductions under section 80DD, you must produce the following documents:
Medical certificate: A copy of the medical certificate that authenticates the disability of the dependent must be submitted for 80DD deductions.
Certificate of self-declaration: A self-declaration certificate must be procured by taxpayers to mention the expenses incurred on dependent’s medical treatment.
Form 10-IA: This form must be submitted in case the taxpayer’s dependent is suffering from cerebral palsy, autism, or multiple disabilities.
Insurance premium receipts: Usually, self-declaration certificate suffices for laying claim to most deductions. However, in case a claim against insurance policy premiums is to be made, it is important to submit receipts of the insurance premium paid.
To claim your 80DD deduction, you would first and foremost need to procure a medical certificate from the CMO (Chief Medical Officer) or a civil surgeon practicing at a government medical hospital or a neurologist holding an MD (Doctor of Medicine).
Next, it’s important to understand the scope of deductions you would be eligible to avail of:
For a dependent person with 40% disability, the taxpayer who takes care of the dependent can claim income tax deductions up to ₹75,000
For a dependent person with a severe 80% disability, the taxpayer who takes care of the dependent can claim income tax deductions up to ₹1,25,000
You can now fill in the requisite ITR, along with documents like insurance receipts, self-declaration certificates to supplement your returns.
Thus, by adhering to the eligibility criteria, producing the necessary documentation and filing one’s returns on time, you can avail of tax benefits under Section 80DD of the ITA.