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Section 80DD Income Tax Deduction for Medical Treatment of Disabled Dependent

Updated on: 03 May, 2022 06:27 PM

Section 80DD of income tax provides flat tax deduction, irrespective of the amount of expenditure to the caretaker of disabled dependent. This is in consideration with the large expenditure on medical treatments which often becomes a troublesome affair for the majority of Indian families. Section 80DD comes as a huge relief to people with disabled dependents. Let’s understand it in detail -

What is Section 80DD of income tax?

Section 80DD is the deduction available for the medical treatment of a handicapped dependant.

The conditions to claim this deduction include:

  • Incurred expenditure for the medical treatment (including nursing), training and rehabilitation of disabled dependents.
  • Paid/deposited amount under a scheme approved by CBDT, framed in this behalf by the Life Insurance Corporation, Unit Trust of India or any other insurance company giving policy specifically meant for taking care of the dependent.

However, it should be noted that if the taxpayer is already claiming tax under Section 80U, then Section 80DD would not be applicable.


What are the terms and conditions under Section 80DD? What is the Eligibility Criteria For Section 80DD ?

  1. Resident Individuals and HUF can claim deductions for the disabled dependent. NRI’s are not eligible for this deduction.
  2. In the case of an individual, dependent can be any family member like spouse, children, parents, brothers and sisters of the taxpayer. While for HUF dependent can be any member of HUF. Dependency can be understood as the disabled individual is wholly or to a large extent dependent on the assessee for their support.
  3. Tax-payers cannot claim deduction for the medical expenditure on themselves under this Section
  4. There should be either expenditure for the medical treatment of dependent or deposit of any amount under the scheme of LIC or another insurer as discussed above.
  5. The assessee, claiming a deduction under this section, shall furnish a copy of the certificate issued by the medical authority in Form 10IA.

What is the meaning of “dependents” under section 80DD?

For the purpose of section 80DD dependents means:

  • Spouse
  • Children
  • Siblings
  • Parents
  • Member of HUF

For claiming the deduction, the above-mentioned individuals should be completely or majorly dependent upon the taxpayer for their support and maintenance.


What is the meaning of “disability” for 80DD?

The definition of disability under Section 80DD is taken from the “Persons with Disabilities Act, 1995” and includes autism, cerebral palsy and multiple disabilities as provided for in the "National Trust for the Welfare of Person with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999."

Therefore, a "Person with Disability" implies a person having 40% suffering as certified by a credible medical authority.


What are the different diseases covered by Section 80DD?

The following disabilities are covered by Section 80DD of the Income Tax Act.-
  1. Autism- It is also called autism spectrum disorder (ASD) and is a complex neurobehavioral condition that is seen as impairment in social interaction and development of language and communication skills involving rigid, repetitive behaviours.
  2. Blindness- The visual impairment where the person suffers any of the conditions like: total absence of sight, visual acuity up to 6/60 or 20/200 (Snellen) or limitation of the field of vision of the eyes subtending an angle of 20 degrees or worse.
  3. Cerebral palsy- The condition involves a set of non-developmental conditions for an individual and can be characterised by an abnormal motor control posture resulting from brain insult or injuries occurring in the pre-natal, perinatal or infant phases of development of an individual.
  4. Hearing impairment- The hearing problem implies a loss of sixty decibels or more in anyof the two ears in the conversational range of frequencies such that the person can’t hear a normal conversation.
  5. Leprosy-cured- A person who is leprosy cured means that the person has been cured of leprosy but still has a set of physical setbacks. There is the loss of sensation in hands or feet or both along with a loss of sensation and paresis in the eye and eye-lid with no manifest deformity. If not that, there is manifest deformity and paresis. There is sufficient mobility in their hands and feet which enables them to engage in normal economic activity. If not any of these, there is extreme physical deformity as well as advanced age and the combined effect prevents the person from undertaking any beneficial occupation.
  6. Loco-motor disability- This impairment involves any disabilities in the bones, joints or muscles leading to substantial restriction of the movement of the limbs or any form of cerebral palsy.
  7. Low vision- A person with low vision means someone with impairment of normal visual functioning despite treatment or standard refractive correction. Thereby, the person has to use or is capable of using vision for the planning or execution of a task with an appropriately designed assistive device.
  8. Mental illness- This would include a vast range of mental disorders but is essentially not any form of "mental retardation".
  9. Mental retardation- This means a condition where there is a completely blocked or incomplete development of the mind, especially characterized by sub-normality of intelligence.

What is the amount of deduction under section 80DD?

This section provides fixed deduction, it does not depend on the age and the amount of expenditure. In the case of:

  • Normal Disability( i.e. at least 40%) the deduction allowed from gross total income is Rs. 75,000.
  • Severe Disability (i.e. 80% or more) the deduction allowed from gross total income is Rs.1,25,000.

Full deduction can be claimed under Section 80DD even if the actual expenses on the said disabled dependant are less than the mentioned amount.

Example for the calculation of 80DD Deduction Amount :

Ram is a resident individual. He deposits Rs.40000 annually with LIC for the maintenance of his handicapped sister, wholly dependent on him. What is the amount of deduction u/s 80DD?

For claiming 80DD deductions let’s first check the conditions :

  • Ram is a resident individual.
  • He is paying the amount in the LIC scheme approved for deduction.
  • Sister is covered under the definition of disabled dependent.

Therefore, he can claim a deduction of Rs.75000. However, if the disability is 80% or more he can claim a Rs.125000 deduction.


How to claim deduction under Section 80DD?

The person claiming the deduction is required to furnish a copy of the certificate issued by the medical authority in the prescribed form i.e., Form 10-IA and prescribed manner alongwith ITR. Since, practically no document is required to be attached with ITR, it is advised to keep the document handy.

Which medical certificate is required under section 80DD?

For claiming deduction under section 80DD medical certificate from an authorised medical practitioner is required. The following persons are deemed credible for such a certificate.

  • A neurologist with a Doctor of Medicine (MD) degree in Neurology.
  • A Pediatric Neurologist for children having a degree equivalent to neurologist in MD.
  • A Civil Surgeon or a Chief Medical Officer (CMO) from any Government hospital

Thus, it simply implies that if you are taking the deduction under this section then keep the certificate with you which you can take from the Authorized medical Practitioner.

Also, it is suggested that the medical prescription and medical records be kept safe in case the income tax department asks for the same in future.

The disability certificate has a specified validity. If the validity of the certificate expires in any financial year, the deduction for that financial year can be claimed using the expired certificate. However, from the next financial year, a new certificate would have to be availed for claiming deduction under Section 80DD in the next year.


What are the conditions for insurance or deposit for the disabled dependent to claim deduction u/s 80DD?

It has already been clarified that Section 80DD can be applied for insurance or deposits made in specified schemes for maintenance of a disabled dependant. The following conditions should be observed for this insurance or deposit amount to be eligible for the scheme-

  • The scheme should provide the payment of annuity or lump sum amount to the dependent, in event of death of the taxpayer.
  • The taxpayer must nominate either the dependant, being a person with disability or any other person or a trust to receive the payment on the assessee’s behalf for the benefit of the dependant.
  • In Budget 2022, it is proposed to amend that and make a provision where deduction will also be available if the lump-sum payment or annuity is available to disabled persons during the lifetime of the subscriber on attaining the age of 60 years.

What will be the taxability of the amount received on the death of disabled dependent?

In the case that the disabled dependent dies before the taxpayer, the amount paid or deposited in the scheme shall be deemed to be the income of the tax-payer in the year of receipt of the said amount.


What is the difference between Section 80U and Section 80DD?

While most of the benefits remain the same for Section 80U and Section 80DD. The basic difference is that while under Section 80U, the individual certified with a disability can claim the tax benefit but in Section 80DD, the tax benefit is claimed by the taxpayer who bears the expense of the entire medical treatment of the individual who is defined as the disabled dependent. Most of the other details remain the same including the specifics of the defined disabilities and the procedures to acquire the tax deduction.


What are the differences between Section 80DD, Section DDB Section 80D and Section 80U?

These three sections are very similar in the benefits they grant to the taxpayers. However, there are some basic differences which must be noted in order to claim their benefits accurately.

Let's have a concise look on these difference amongst the section 80DD,80U,80DDB and 80D

80DD 80U 80DDB 80D
When to claim Medical treatment of a disabled dependent Medical  Treatment of disabled assessee  (self) Medical Treatment of Self/Dependant for specified diseases Medical Insurance & Medical expenditure
Amount of tax benefit
  • 75,000(non-severe disability)
  • 1,25,000(severe disability)
  • 75,000(non-severe disability)
  • 1,25,000(severe disability)
  • Amount actually paid

or
  • 40,000(age < 60)
  • 1,00,000 (age 60 or above)
-whichever is less
Max.upto 1,00,000 Subject to certain conditions

Conclusion

The Section 80DD is surely a boon for several Indian families who would be greatly benefitted on their medical expenses due to this. The amendments made in recent years ensure that as the medical field has expanded and problems have increased, there is a marked rise in the maximum limit of amount eligible for deduction. The Section 80DD must be distinguished clearly from other sections of the Income Tax Act providing similar benefits to taxpayers but with different specifics.


Frequently Asked Questions (FAQs)

Q - What are the different tax deduction sections for people with disabilities?

There are several sections in the Income Tax Act to serve people with disabilities. Section 80DD can be claimed by the taxpayer for the medical treatment of a dependent person with a disability. Section 80U can be claimed by the person with a disability for the medical treatment of himself.


Q - Who is the “dependant” with reference to the Section 80DD?

As per the Section 80DD, a “dependant” means

  • For individuals: any immediate family members being totally or majorly dependent on such individuals for all their medical expenses i.e., spouse,children,parents,brothers and sisters.
  • For HUF: any member of the family being totally or majorly dependent.

Q - How can the taxpayer claim the entire amount of deduction irrespective of the actual expenditure?

Section 80DD clearly allows one to claim the income tax deduction irrespective of the actual expenditure. The deduction can be claimed on the basis of the severity of the dependent's disability. Form-10-IA issued by prescribed medical authority is also required for claiming deduction under this section.


Q - Can the disabled person claim the deduction under Section 80DD by himself?

No, the disabled person cannot claim a deduction under Section 80DD by himself or herself. The tax benefit can only be claimed by a dependent family member.
Section 80U can be useful for a person with a disability who wants to claim the deduction for himself or herself.


Q - Can a person claim a tax deduction for a distant relative who is totally dependent on the taxpayer for medical expenses?

No, Section 80DD clearly defines “dependent” and it does not include cousins, friends or any other close association outside the immediate family circle, even if the person is wholly dependent on the taxpayer for their medical expenses.


Q - What is the difference between Section 80U and Section 80DD?

While most of the benefits remain the same for both the Section 80U and Section 80DD. The basic difference is that while under Section 80U, the individual certified with a disability can claim the tax benefit but in Section 80DD, the tax benefit is claimed by the family member who bears the medical expense of the disabled dependent.


Q - Can NRI claim deduction under section 80DD?

NRIs (Non-Resident Indians) are specifically barred from claiming tax benefits under Section 80DD. A person must be essentially a resident of India to claim the tax deductions.


Q - Can 80U and 80DD be claimed together?

Assess can make claim u/s 80DD only if he has not made any claim u/s 80U. Therefore, deduction under both sections cannot be claimed.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.