Section 80U specifies the tax deduction allowed for disabled persons in the Income Tax Act of India. According to this section, a flat deduction is given to the disabled individual based on the severity of the disability and not the amount of the medical expenditure to treat the same. To claim deduction under this section, the person must be certified to have a disability from an approved medical authority; he must be an Indian resident in the assessment year and must suffer from at least 40% disability as laid out by law.
Deductions under Section 80U
The amount of deduction depends on how severe the disability is. According to the Income-tax Act, an individual taxman suffering from 40% disability (disabled person) can claim a deduction of Rs75,000, and a taxpayer suffering from 80% disability (severely disabled person) can claim a deduction of s. 1,25,000.
If the individual's gross total income is Rs. 10 lakhs and he suffers from 60% disability, he can claim a deduction of Rs 75,000, and his total income would reduce to Rs 9.25 Lakh. The tax payable amount would also change as follows:
Gross total income = Rs 10 Lakh
Tax payable on income:
Without Section 80U deduction:
12,500(5% of Rs 2.5 Lakh) + 1,00,000(20% of Rs 1 Lakh) = Rs 1,12,500
With Section 80U deduction:
12,500(5% of Rs 2.5 Lakh) + 85,000(20% of Rs 4.25 Lakh) = Rs 97,500
From the above example, we see that the taxpayer can save Rs 15,000 in taxes under Section 80U.
Eligibility Requirements to Claim under Section 80U
According to the Persons with Disability Act, 1995 (Equal Opportunities, Protection of Rights and Full Participation), individuals suffering from the following disabilities up to minimum 40% impairment can claim deduction under Section 80U of Income Tax Act:
Low Vision –
Those individuals who have a visual impairment that cannot be corrected by surgery but can still see via assistance from external devices.
This disability means that the individual has a complete loss of vision by 20 degrees angle or even worse, a visual acuity that is not more than 61-60 even after corrective lenses.
Mental Retardation –
This includes people who suffer from arrested development or incomplete mental development that can result in below the normal level of intelligence.
Leprosy Cured –
This indicates patients who have recovered from leprosy but have lost sensation in hands, legs, and paresis in eyes/eyelids. Senior patients with severe deformities who cannot function normally fall into this category.
Loco Motor Disability –
This includes individuals with minimal limb movement due to the disability of bone joints and muscles.
Mental Illness –
This includes all conditions related to mental disorder apart from mental retardation.
Hearing Impairment –
This is diagnosed if the individual has a hearing capacity of not more than 60 decibels.
The government of India laws defines severe disability as a condition where an individual suffers 80% or more in any of the above categories. Severe disabilities can also include cerebral palsy, autism and multiple disabilities.
The documents required to claim tax deduction under Section 80U of Income-tax Act are the disability certificate issued by an authorized medical authority, and the Form 10-IA filled up in case of conditions like cerebral palsy and autism.
There is no need to produce bills for the cost of treatment of disabilities.
Claim Process for Section 80U
For claiming under section 80 U, one must submit a medical certificate stating disability along with the income tax returns as specified in Section 139 for the relevant assessment year. If the disability certificate gets expired, the individual can claim deductions in the same year of certificate expiry.
However, for the successive years, a new certificate will be required to avail benefits.
Certificates may be obtained from medical authorities who have MD (Doctor of medicine) in Neurology, a paediatric neurologist (for children), a civil surgeon, or a chief medical officer at a government hospital.
The person must attach a copy of the medical certificate in the prescribed format and submit it along with the Income Tax Return. The certificate must clearly state the disability suffered by the individual and follow the format contained in Form 10-IA. This form can be downloaded from the official website of the Income-tax of India.
The medical certificate, prescriptions, and other medical records must be kept safely for future reference.
Ans: Section 80U offers tax deductions for individuals with a disability, while Section 80DD proved deductions to the dependents of the disabled taxpayer. The dependents can be spouse, children, siblings, parents, or members of the HUF. Deduction under Section 80DD is allowed if the individual incurred medical expenses for the treatment of the disabled dependent.
Ans: No, Deductions can be availed only by Indian citizens.
Ans: No. If the individual has claimed the deduction under Section 80U, he cannot claim it under Section 80DD and vice-versa.
Ans: Medical reports and bills are not needed for claiming benefit but a medical certificate stating disability will be required from an authorized medical examiner.
Ans: No. the deduction amount is a fixed one available at a flat rate and independent of the expenses incurred in the treatment of the disabled individual.
Ans: Yes, they can claim deductions under other sections apart from 80U except under Section 80DD. They can claim under Section 80C, Section 80D, and Section 80E, and so on.
Ans: A person with severe disability means one who is suffering from 80% disability due to the critical conditions covered. He is entitled to a deduction amount of Rs. 1,25,000.
Ans: In the current assessment year, one can claim deduction under this section based on the expired certificate, but he must get a new certificate to obtain a deduction in the subsequent year.
Ans: Medical disability certificate can be provided by:
- Civil surgeon of a government hospital
- Paediatric Neurologist
Ans: If the individual has a disability between 40% and 80%, he can claim a deduction of Rs 75,000 for the financial year. If the disability is more than 80%, then he can claim a deduction of Rs 1,25,000.
Ans: The documents required are medical certificate and Form-IA certificate for persons with severe illness such as autism, cerebral palsy, autism, and multiple disabilities.
Ans: To avail tax deduction, the taxpayer must furnish a copy of the medical certificate along with ITR 139, in the assessment year when the deduction is claimed.