Section 80DD

What is Section 80DD?

Section 80DD provides tax deductions for individuals or HUFs (Hindu Undivided Families) who incur expenses on the medical treatment, care, or rehabilitation of a dependent with a disability. It also covers premium payments for specific insurance plans for the dependent's benefit. The deduction amount is up to ₹75,000 for a dependent with a disability and ₹1,25,000 for severe disability.

• Section 80DD under Old and New Tax Regime: Section 80DD is available only under the old tax regime and not under the new tax regime. 

• Income Tax Calculator: Therefore, using the old and new tax regime calculator is essential to evaluate which regime provides maximum tax benefits, especially when deductions like Section 80DD apply.

Maximum Amount of Deduction Under Section 80DD

The maximum deduction under Section 80DD is:

• ₹75,000 for a dependent with a disability (40% or more but less than 80%).

• ₹1,25,000 for a dependent with a severe disability (80% or more).

Eligible Taxpayers Under Section 80DD

Eligible taxpayers under Section 80DD include:

1. Residential Status: 

   • Resident individuals

   • Hindu Undivided Families (HUFs)

   • Exclusion: Non-resident individuals are not eligible for this deduction.

2. Dependents: The deductions can be claimed for expenses incurred on dependents, which include:

   • Spouse

   • Children

   • Parents

   • Siblings (brothers and sisters)

Conditions to Claim Deductions Under Section 80DD

• Taxpayer Type: Deductions can be claimed by resident individuals and Hindu Undivided Families (HUFs).

• Dependent Definition: The taxpayer must have a dependent who is a spouse, child, parent, brother, or sister. In the case of HUFs, dependents include members of the family.

• Dependency for Maintenance: To qualify for the Section 80DD deduction, it is essential that the disabled dependent is financially reliant on the taxpayer. This means that the dependent must rely on the taxpayer for more than 50% of their maintenance costs.

• Disability Requirement: The dependent must have a disability that is at least 40% as defined by the Persons with Disabilities Act, 1995. This includes various conditions such as blindness, low vision, hearing impairment, and mental illness.

• Residential Status: The taxpayer must be a resident of India to claim this deduction.

• Medical Certification: A medical certificate confirming the disability must be obtained from a recognized medical authority. This certification is crucial for claiming deductions.

List of Disabilities for Deductions under Section 80DD

Section 80DD recognizes several specific disabilities for tax deductions:

• Blindness: Total absence of sight or visual acuity not exceeding 6/60 or 20/200 in the better eye.

• Low Vision: Visual acuity not exceeding 6/18 or 20/60 up to 3/60 or 10/200 in the better eye.

• Hearing Impairment: Significant loss of hearing affecting daily life.

• Locomotor Disability: Impairment in movement due to physical disability.

• Mental Illness: Conditions that affect mental health and functioning.

• Cerebral Palsy: A group of disorders affecting movement and muscle tone.

• Autism Spectrum Disorder: A developmental disorder affecting communication and behaviour.

• Leprosy-Cured: Individuals cured of leprosy but still experiencing deformities.

• Multiple Disabilities: A combination of various disabilities.

Difference Between Section 80U and Section 80DD

The following table outlines the key differences between Section 80U vs Section 80DD of the Income Tax Act, 1961

Documents Required to Claim Section 80DD Deductions

To claim deductions under Section 80DD, taxpayers need to submit:

• Medical Certificate: A certificate from a qualified medical authority confirming the extent of the disability.

• Form 10-IA: Required if the dependent has conditions such as autism or cerebral palsy; this form must be filled out and certified by a competent authority.

• Proof of Expenses: Original receipts or bills for medical treatment, rehabilitation, or maintenance expenses incurred for the dependent.

Important Considerations

• Non-Duplication of Claims: If the dependent has already claimed deductions under Section 80U (which is for individuals with disabilities), then Section 80DD cannot be claimed for the same dependent.

• Claiming Deductions: The taxpayer can claim these deductions irrespective of whether their actual expenses exceed the specified limits. This provision is designed to provide financial relief to families supporting disabled dependents.

Wrapping It Up

Section 80DD aims to provide financial relief to families caring for dependents with disabilities by allowing them to claim deductions on various expenses related to medical treatment and maintenance. Understanding the specific eligibility criteria and required documentation is essential for taxpayers looking to benefit from this provision.