Section 80U - Deduction under Section 80U

What is Section 80U?

For individual taxpayers in India who suffer from a disability, Section 80U of the Income Tax Act includes tax deduction provisions. Such taxpayers can claim deduction under Section 80U by presenting a certification from an appropriate medical authority.

An MD (Neurology), Civil Surgeon, Pediatric neurologist or a CMO at a government hospital can provide an individual with authentic certification of disability.

Let us take a look at the terms and conditions applicable to those who seek benefits of Section 80U.

Deduction applicable under Section 80U- Terms & Conditions

The following terms and conditions are applicable to the assessee wanting to avail income tax deduction under Section 80U:

• The exemption is limited to INR 75,000 per year on the interest income for a person with a 40% disability.

• The exemption is limited to INR 1.25 Lacs per year for a person with an 80% disability (also called severe disability).

• Deductions can be claimed by individuals suffering from disabilities and severe disabilities (also known as PwD, or Person with a Disability by Protection of Rights, Full Participation and Equal Opportunities Act, 1995).

Eligibility for Claiming Deductions under Section 80U

According to the Income Tax Act, deductions under Section 80U can be claimed by:

• Person with Disability

• Indian Residents

• NRI Person with Disability can avail deduction under Section 80U

• PwD falling under one or more of the following categories:

  • Low Vision: Visual impairment resulting in low eyesight and which can not be cured through surgery. The person requires the assistance of external devices.

  • Blindness: The complete absence of eyesight or a limited vision by 20 degrees. Visual acuity less than 6160 even after the use of the corrective lens.

  • Cured Leprosy: Individuals who have been cured of leprosy but their sensation loss in limbs persists and/or with paresis in eyes.

  • Senior citizens or individuals with an extreme deformity that limits them from being employed in an occupation.

  • Loco Motor Disability: People with disabilities of joints or muscles resulting in limited movement of limbs.

  • Hearing Impairment: Loss of auditory sense to at least 60 decibels

  • Mental Retardation: An arrested development of mental abilities leading to subnormal intelligence levels.

  • Mental Illness: Mental disorders apart from retardation are categorized under mental illnesses.

• PwD falling under one or both of the following severe disability categories:

  • Autism

  • Cerebral Palsy

Requirements to claim tax deduction under Section 80U

• Medical certification of the disability by a medical authority, and Form 10-IA for severe disability as per section 139 of the Income Tax Act.

• If the disability assessment certificate is expired, one can claim tax deductions without hassle in the same financial year. Although, the PwD will require a fresh certificate from the subsequent year to claim tax deduction under Section 80U.

Key differences between Section 80U and Section 80DD

There are major differences that can be noticed under the provision of Section 80DD and Section 80U. The following are the key distinctions.

Conclusion

Section 80U has supported individuals with disabilities and severe disabilities by lowering financial burdens. Section 80U of the Income Tax Act can prove to be a great source of financial relief to such taxpayers. Ensure that you make good use of the deductions available under Section 80U and to lower your tax burden even further, invest in ULIPs on Finserv MARKETS.