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Section 80DD of the income tax act provides a flat deduction, irrespective of the amount of expenditure incurred by the family of a disabled dependent. This is in consideration of 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
Section 80DD is the deduction available to the resident individual or HUF for the medical treatment of a disabled dependent.
The conditions to claim this deduction include:
However, it should be noted that if the differently disabled individual is already claiming a deduction under Section 80U, then Section 80DD would not be applicable to the person who is incurring expenditure.
For the purpose of section 80DD, dependents mean
For claiming the deduction, the above-mentioned individuals should be completely or majorly dependent upon the taxpayer for their support and maintenance.
The definition of disability under Section 80DD of the income tax act 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.
The following disabilities are covered by Section 80DD of the Income Tax Act.-
This section provides a fixed deduction, it does not depend on the age and the amount of expenditure. In the case of
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 calculating 80DD Deduction Amount:
Ram is a resident individual. He deposits Rs.40000 annually with LIC for the maintenance of his handicapped sister, who is wholly dependent on him. What is the amount of deduction u/s 80DD?
For claiming 80DD deductions, let’s first check the conditions:
Therefore, he can claim a deduction of Rs.75000. However, if the disability is 80% or more, he can claim Rs.125000 deduction.
The person claiming the deduction is required to keep handy a copy of the certificate issued by the medical authority in the prescribed form, i.e., Form 10-IA, and in the prescribed manner. Since practically no document is required to be attached with ITR, it is advised to keep the document handy.
For claiming deduction under section 80DD medical certificate from an authorized medical practitioner is required. The following persons are deemed credible for such a certificate.
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 the 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 to claim a deduction under Section 80DD in the next year.
It has already been clarified that Section 80DD can be applied for insurance or deposits made in specified schemes for the maintenance of a disabled dependant. The following conditions should be observed for this insurance or deposit amount to be eligible for the scheme-
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 taxpayer in the year of receipt of the said amount.
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 deduction, in Section 80DD, the deduction 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.
The taxpayer cannot avail deduction under section 80DD if he/she has already claimed a deduction under section 80U.
These four sections are very similar in the benefits they grant to the taxpayers. However, there are some basic differences that must be noted to claim their benefits accurately.
Let's have a concise look at these differences amongst the section 80DD,80U,80DDB, and 80D
| 80DD | 80U | 80DDB | 80D | |
|---|---|---|---|---|
| When to claim | Medical treatment of a disabled dependent | Medical Treatment of the 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 |
Section 80DD is surely a boon for several Indian families who would be greatly benefitted from 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 the amount eligible for deduction. Section 80DD must be distinguished clearly from other sections of the Income Tax Act providing similar benefits to taxpayers but with different specifics.
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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.
As per Section 80DD, a “dependant” means
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 a prescribed medical authority is also required for claiming deduction under this section.
No, the disabled person cannot claim a deduction under Section 80DD by himself or herself. The tax benefit can only be claimed by the family member who has incurred expenses for the differently disabled person.
Section 80U can be useful for a person with a disability who wants to claim the deduction for himself or herself.
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. Dependants can be children, spouses, parents, brothers & sisters of the individual. And in the case of HUF, any member can be a dependent.
While most of the benefits remain the same for both 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 himself, but in Section 80DD, the tax benefit is claimed by the family member who bears the medical expense of the disabled dependent.
NRIs (Non-Resident Indians) are specifically barred from claiming tax deductions under Section 80DD. A person must be essentially a resident of India to claim the tax deductions u/s 80DD.
Assessee can claim deduction u/s 80DD only if the other individual has not made any claim u/s 80U. Therefore, deduction under both sections cannot be claimed.
