Jigar M. Patel
International Tax Attorney
The Income-tax Act provides for special deductions in computing the taxable income of a taxpayer who is disabled or who is required to incur expenditure for the medical treatment, training or rehabilitation of a disabled dependant or any amount deposited for the maintenance of such disabled dependant.
Similarly, deduction is also allowed to a taxpayer who is required to incur any expenditure for the medical treatment of specified diseases or ailments, either for himself or a dependant relative.
Section 80U – Deduction for Persons with Disability
Under the provisions of Sec. 80U, a resident individual suffering from a permanent physical disability (including blindness) or mental retardation, is allowed a deduction of Rs.75,000 in the computation of his Taxable Income.
Moreover, a higher deduction of Rs.1,25,000 has been provided in case of persons with Severe Disability. For claiming this deduction the taxpayer is required to obtain a certificate certifying the disability from a recognized Medical Authority in Form 10-IA.
Section 80DD – Deduction for Medical Treatment and Maintenance of a Dependant with Disability
Sec. 80DD provides that if a resident individual or HUF has incurred any expenditure by way of medical treatment (including nursing), training or rehabilitation of a dependant, being a person with disability, or paid or deposited any amount under any approved scheme framed by the LIC or any insurer or UTI for the maintenance of such dependant, the individual or HUF, as the case may be, shall be allowed a deduction up to the maximum amount of Rs.75,000. Moreover, a higher deduction of Rs.1,25,000 has been provided in case of persons with Severe Disability.
It is pertinent to note that if the conditions for eligibility are fulfilled, full deduction prescribed under Sec. 80DD shall be allowed, even if some expenditure is incurred or some amount is deposited under the approved schemes.
Meaning of Disability for purposes of Sec. 80U and Sec. 80DD
For the above purposes, a ‘person with disability’ means a person suffering from any disability over 40% as certified by a medical authority. ‘Disability’ shall include blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, autism, cerebral palsy, multiple disability, mental retardation and mental illness as defined under the Disability Act, 1995. Where, the extent of disability is over 80%, the same is considered as a case of ‘Severe Disability’.
Section 80DDB – Deduction for Medical Treatment of Specified Diseases
Section 80DDB provides for a deduction of upto Rs.40,000 in respect of any amount actually paid for the medical treatment of a specified disease or ailment, for himself or a dependant relative in case the taxpayer is an individual, or for any member of the HUF, in case the taxpayer is a HUF. This Section also provides that where such expenditure is incurred in respect of a Senior Citizen (being a person of the age 60 years or more), the deduction allowable shall be upto Rs.1,00,000. It needs to be borne in mind that the deduction allowable under this section shall be the lesser of the prescribed amount or the expenditure actually incurred.
Moreover, a proviso has also been inserted to the effect that the deduction available under this Section shall be reduced by the amount, if any, received from any insurance company in respect of a medical insurance policy taken for covering such medical treatment expenditure or if reimbursed by an employer.
The specified diseases and ailments have been listed under Rule 11DD of the Income-tax Rules and these include Cancer, AIDS, Haemophilia, Thalassaemia, Chronic Renal failure and other Neurological diseases.
