Taxation law in India benefits individuals with disabilities by decreasing their financial burden. One such provision is Section 80U of Income Tax Act, 1961, which provides tax deductions to all individuals with disabilities. A good understanding of Section 80U concerning eligibility criteria, limits for deduction and supporting documentation would be useful in seeking tax relief.
What is section 80U?
Section 80U provides for a flat deduction available to certain individuals for what is termed 'certified disability.' Unlike other tax deductions, where the quantum of the deduction depends on the expenses incurred, this one is allowed without any regard to the actual medical expenses borne by the taxpayer. This 80u deduction may be availed of only by resident individuals certified as disabled by a recognised medical authority.
Definition of a person with disability (PwD)
Under Section 80U, a person with disability (PwD) is defined as an individual suffering from at least 40% disability as per the guidelines laid down in the Rights of Persons with Disabilities Act, 2016.
Definition of severe disability
A severely disabled individual has a disability of 80% or more. These individuals qualify for a higher tax deduction under Section 80U.
Which disabilities are covered under Section 80U of the income tax act?
The Income Tax Act recognises the following disabilities for claiming deduction under 80U:
- Blindness
- Low vision
- Hearing impairment
- Leprosy-cured individuals
- Locomotor disability
- Mental retardation (Intellectual disability)
- Mental illness
- Autism
- Cerebral palsy
- Dwarfism
- Multiple disabilities
Deduction limit under Section 80U of the income tax act
The deduction under Section 80U is fixed and does not depend on actual expenses incurred. The 80U deduction amount is:
- ₹75,000 for individuals with at least 40% disability.
- ₹1,25,000 for individuals with 80% or more disability (severe disability).
How to claim a deduction under Section 80U?
To claim an income tax rebate for physically handicapped 80U:
- Get a valid disability certificate from a prescribed medical authority.
- Ensure the certificate is valid for the applicable financial year.
- Mention the details in the Income Tax Return (ITR) form while filing taxes.
- Retain the certificate and related documents in case of verification by tax authorities.
Documents required to claim deductions under Section 80U
To avail of deductions under 80U of income tax act, the following documents are required:
- Valid disability certificate issued by a prescribed medical authority.
- Medical reports and assessments confirm the percentage of disability.
- Self-declaration stating that the taxpayer has not claimed reimbursement for medical expenses elsewhere.
- Form 10-IA (in cases of severe disability).
What are the categories of disabilities under Section 80U of the income tax act?
Section 80U categorises disabilities into two main types:
- Persons with disabilities (PwD): Those having at least 40% disability.
- Severely disabled persons: Those with 80% or more disability.
Which medical authority can issue certificates under section 80U?
To claim a deduction under Section 80U, a disability certificate can be issued by any of the following specialists:
- A neurologist with a degree of MD in Neurology (for neurological disabilities).
- A civil surgeon in a government hospital.
- A chief medical officer (CMO) of a government hospital.
FAQs
- Who is eligible for deductions under Section 80U?
The deduction may be claimed only by any resident individual who has furnished a certificate of disability obtained from a prescribed medical authority.
- Does Section 80U allow deductions that family members of the disabled individual can claim?
No. Section 80U applies only to disabled taxpayers. However, family members who take care of a disabled dependent can claim a tax deduction via Section 80DD.
Conclusion
Section 80U provides tax relief for individuals with disabilities. It gives the taxpayer a fixed deduction, irrespective of medical insurance coverage, making it an important form of financial assistance. A valid disability certificate is of primary importance to claim this 80U tax benefit. Awareness and timely filing will help taxpayers maximise their deductions while reducing tax burden.
In addition to tax deductions, good health insurance for parents, individuals and families ensures access to the best healthcare facilities for disability management and care. Moreover, medical insurance reduces the financial burden in accidents and unexpected medical emergencies.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis, or treatment. Please consult your general physician or another certified medical professional for any questions regarding a medical condition. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.