Income tax is payable on the income which you earn in a financial year. If you are an earning member, paying income tax becomes mandatory if your income exceeds the exemption limit. However, though the tax is mandatory, there are various ways in which the tax liability can be lowered.
The Income Tax Department has given a special relief to the specially abled person.The deduction can be availed under section 80U. Don't get confused between 80DD and 80U. Section 80U provides deduction the concerned person and 80DD allows the person who is taking care of the concerned person.
What is Section 80U deduction?
If the tax-payer is a disabled individual, he/she can claim a deduction under Section 80U. The tax-payer should be a resident individual and suffer from at least 40% disability. The disability should also be certified by the recognised medical authorities so that the tax-payer can become eligible for deductions under Section 80U.
What are the disabilities covered under Section 80U?
Section 80U covers the following types of disabilities –
- Loco motor disability
- Low vision
- Leprosy – cured
- Mental retardation
- Hearing impairment
- Cerebral palsy
- Multiple disabilities
- Mental illness
The tax-payer would be considered disabled if he/she is suffering from a disability which is 40% or more but below 80%. However, if the tax-payer is suffering from a disability which is more than 80%, it would be termed as a severe disability. The deduction limit varies depending on the severity of disability suffered.
What is the amount of deduction available under Section 80U?
As stated earlier, the deduction amount depends on the severity of disability. So, tax-payers with up to 80% disability get a deduction of INR 75,000 and tax-payers with severe disabilities which is more than 80% get a deduction of INR 1.25 lakhs. The deduction is a flat amount which is allowed as a deduction from the taxable income.
So, if the tax-payer’s aggregate income is INR 10 lakhs and he suffers from a 60% disability, he can avail a deduction of INR 75,000 which would reduce his gross total income to INR 9.25 lakhs. The computation of the tax liability would also change. Here’s how –
|Without Section 80U deduction||With Section 80U deduction|
|Gross total income/Taxable income – INR 10 lakhs||Gross Total Income – INR 10 lakhs
Taxable Income – INR 9.25 lakhs
|Tax payable on income between INR 2.5 lakhs and INR 5 lakhs – 5% of INR 2.5 lakhs = INR 12,500
Tax payable on income between INR 5 lakhs and INR 10 lakhs – 20% of INR 5 lakhs = INR 1 lakh
|Tax payable on income between INR 2.5 lakhs and INR 5 lakhs – 5% of INR 2.5 lakhs = INR 12,500
Tax payable on income between INR 5 lakhs and INR 9.25 lakhs – 20% of INR 4.25 lakhs = INR 85,000
|Total tax payable = INR 112,500||Total tax payable = INR 97,500|
Thus, with the deduction available under Section 80U, the tax payer can save INR 15,000 in taxes in the above situation .
*From FY 2020-21 the benefits of deduction under section 80U will be available under the old tax regime only. To know your taxability under old v/s new tax regime click here.
Why is the deduction allowed?
Disabled individuals have additional medical expenses because of the disability they suffer. They have to spend huge amounts of money on treatments and facilities which enable them to lead a better life. These expenses eat into their incomes and taxing them on their total income is not fair. That is why the deduction is allowed on their aggregate income which reduces the income chargeable to tax. As the income is reduced, the tax liability also reduces giving disabled tax-payers tax relief.
What are the Terms and Conditions to avail deductions under Section 80U?
Deduction under Section 80U would be available to tax-payers only if the following conditions are fulfilled –
- A medical certificate should be submitted certifying the disability suffered. The certificate should be prepared by a recognised medical authority in a prescribed format which is contained in Form 10 –IA. The form can be found on the Income Tax India Website -
- Proof of expenses incurred on medical treatments and rehabilitation of the disabled tax-payer would not be required because the deduction is allowed at a flat rate irrespective of the actual costs incurred.
- The medical certificate should contain the details of the disability suffered by the tax-payer.
- The medical certificate should be submitted with the income tax returns filed by the tax-payer. The tax return should be filed in accordance with the provisions of Section 139 of the Income Tax Act.
- The disability certificate has a specified validity. If the validity of the certificate expires in any financial year, 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 80U in the next year.
- The Medical Authority means clause (p) of Section 2 of the Persons with Disabilities (Equal Opportunities,Protection of Rights and Full Participation)Act,1995 or any hospital or medical institution as notified by the appropriate government.
- Medical authorities who are eligible for issuing a disability certificate can be any of the following –
- Neurologist who has a degree of MD (Doctor of Medicine) in Neurology
- A civil surgeon
- A Chief Medical Officer in a Government hospital
- A paediatric neurologist who has a degree of MD (Doctor of Medicine) in Neurology in case of disabled children
- If the tax-payer claims a deduction under Section 80U, he/she cannot claim another deduction under Section 80DD
Calculate your tax liability using our Income Tax Calculator.
A word about Section 80DD
Section 80U and Section 80DD are often confused together because both these sections allow deductions for disabled individuals. However, the main difference between these sections is that while Section 80U provides deductions for a disabled tax-payer, Section 80DD allows deductions if the tax-payer has a dependent suffering from disability. In case of an individual, the dependent can be spouse, children, parents or siblings and in case of HUF, a member of the HUF. Moreover, the deduction under Section 80DD is allowed if the tax-payer has incurred expenses on treatments, medicines or rehabilitation of the disabled dependent. So, both these sections have different meanings and tax implications and should not be confused to be one.
Disabled tax-payers should understand the provisions of deduction under Section 80U and utilise these provisions to claim a tax benefit on your taxable income.
Frequently Asked Questions
Q- Who pays the premium under the Pradhan Mantri Suraksha Bima Yojana?
Ans: The individual who subscribes to the scheme is required to pay the premiums of the scheme.
Q- Can a NRI avail deduction under Section 80U?
Ans: No, deductions under Section 80U are allowed only to resident Indians.
Q- Can I claim a deduction under both Sections 80U and Section 80DD?
Ans: No, if the tax-payer has claimed a deduction under Section 80U, he/she cannot claim another deduction under Section 80DD although the deduction under this section is for disabled dependents. Similarly, if the tax-payer has claimed a deduction under Section 80DD, he/she cannot claim another deduction under Section 80U for self.
Q- Would the medical reports or bills required to be submitted for availing deduction under Section 80U?
Ans: No, no medical bills or reports would be required to avail a deduction under Section 80U. However, a disability certificate issued by an authorised medical practitioner would be required.
Q- Is the deduction amount based on the actual expenses incurred?
Ans: No, the deduction is allowed at a flat rate irrespective of the expenses incurred in treatment or maintenance of the disability.
Q- Can tax-payers claiming deduction under Section 80U also claim deductions under other eligible sections?
Ans: Yes, other than Section 80DD, tax-payers claiming deduction under Section 80U can claim deductions under other sections too like Section 80C, Section 80D, Section 80E, etc.
Q- What are the expenditure that make me eligible for tax exemptions under Section 80C of the Income Tax Act?
Ans: Section 80C provides exemptions for various payments made by an individual or HUF which include investments such as LIC premium, deferred annuity premium, contribution to PF, etc. Payments in the nature of expenditure which are eligible for 80C deduction are tuition fees of 2 children and repayment of housing loan.
Q- What is the maximum deduction that I can claim under 80C?
Ans: The aggregate of all deductions claimed under section 80C cannot exceed RS 1.50 lakh for each financial year.
Q- What are the conditions for being eligible for claiming deductions on my child’s tuition fees, under Section 80C?
Ans: The conditions for being eligible for claiming deductions on a child’s tuition fees are: Paid to any university, college, school or other educational institutions within India; for maximum upto 2 children per individual; and for full time education. The tuition fees eligible for deduction shall not include development fees, donation, etc. It shall also exclude any payment made to any institution located outside India.
Q- What are the schemes that I can invest in to be eligible for tax deductions under 80C of the Income Tax Act, 1961?
Ans: The schemes that you can invest in to be eligible for tax deductions under 80C are as follows: Life insurance policy, deferred annuity premium, PF contribution, approved superannuation fund, sukanya samridhi account, NSCs VIII, Unit linked insurance plan of LIC Mutual Fund, approved annuity plan of LIC, notified units of mutual fund or UTI, Notified pension fund set up by mutual fund or UTI, NHB(Tax Saving) Term deposit scheme, notified deposit scheme, certain equity shares or debentures, certain units of mutual fund, 5 year term deposit, notified bonds issued by NABARD, Senior Citizens Savings Scheme, 5 year post office time deposit.
Q- What is severe disability for 80u?
Ans: A person with a disability means a person who is suffering from at least 80% of a disability. If an individual has severe disability (i.e., 80% or more of a disability) then he is eligible for a deduction of Rs. 1,25,000.
Q- Can I claim both 80dd and 80u?
Ans: Yes you can claim a deduction under both section 80DD and 80U, if you have incurred medical expenditure for treatment of a differently abled person and for yourself and you are also a differently abled person. However, one important thing to be kept in mind is that If the individual is claiming deduction under section 80U, then no other person can claim a deduction under section 80DD for the aforesaid person.
Q- What amount is accepted for deduction under Section 80dd regarding disability?
Ans: The amount of deduction that can be claimed depends on the percentage of disability. If the individual or dependent has 40 per cent or more disability but less than 80 per cent, then the deduction of Rs 75,000 can be claimed in a financial year and disability is more than 80% then deduction is INR 1.25 lakh
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