Dealing with a disability and paying for medical expenses amid all other livelihood needs is undoubtedly a burdensome task. On top of that, if you fall under the category of a taxpaying citizen, it can take a toll on your financial condition.
Keeping all these hassles in mind, a section under the name 80U has been introduced in the Income Tax laws. With the help of Section 80U, individual taxpayers of India suffering from a disability that has been categorized in the laws can claim tax deductions of up to Rs. 75000 on their income. Read on to see how Section 80U functions and understand the terms and conditions one needs to fulfill to qualify for tax benefits.
Understanding Section 80U
As per Section 80U of the Income Tax Act, 1961, any individual taxpayer who has a disability can claim tax deduction benefits. However, one needs to fall into the given set of categories mentioned in the Income Tax laws.
Who Can Claim Deductions Under Section 80U?
According to the Persons with Disability Act, 1955, any individual suffering from at least 40% disability certified by a given medical authority is referred to as a Person with Disability (PwD). Only he can avail tax deductions as per Section 80U. A person suffering from the following ailments can be categorized as disabled.
- Blindness: Complete loss of eyesight or a limited vision of 20 degrees.
- Low Vision: Any visual ailment that has led to deficient eyesight cannot be cured through surgery. The individual concerned, therefore, needs external devices to see.
- Cured Leprosy: A person who has been cured of leprosy but has lost sensation in hands or feet and has got paresis in the eye region.
- Mentally Retarded: In the cases where a person’s mental development has stopped and led to subnormal intelligence levels.
- Locomotor Disability: A person who suffers from a strict limb movement owing to the disability of muscles or joints.
- Hearing Impairment: Loss of auditory power of not more than 60 decibels.
Section 80U of the Income Tax Act also provides for individuals who have a rigorous disability. Any person suffering from 80% or more disability for the ailments mentioned above falls under the category of severe disability. Conditions such as cerebral palsy, multiple disabilities, autism are included in this category.
Deduction Limit Under Section 80U
The deduction limits are different for an individual suffering from 40% disability and 80% disability. Let’s see the deduction limits provided for both categories.
A person with a disability: As per Section 80U, any person suffering from at least 40% disability in the categories mentioned above can claim tax benefits for up to Rs. 75,000 on his taxable income.
A person with severe disability: Any person suffering from 80% disability or more (in the case of one ailment or multiple ailments) can claim tax benefits for up to Rs. 1.25 lakhs as per Section 80U.
Previously, the limits were set to Rs. 50,000 and Rs. 1 lakh, respectively. The changes will be functional from the assessment year 2020-2021.
|Disability Type||Tax Deductions Provided|
|General Disability (at least 40%)||Upto Rs. 75,000|
|Severe Disability (80% or more)||Upto Rs. 1.25 lakh|
How to Claim Tax Benefits Under Section 80U?
To claim tax deductions under Section 80U, you need to provide a certificate from a relevant medical authority where your disability will be certified. Any other documents such as the bill of hospitals or other items defining cost treatments will not be required. However, in the case of ailments such as cerebral palsy and autism, you will be required to fill the form 10-IA in addition to the certificate.
When filing the tax benefits claim, you will be required to submit the disability certificate and return of income tax certificate according to Section 139 of the concerned assessment year.
Point to note: If the disability assessment certificate expires, you can still claim tax deductions for the year in which the certificate has expired. But, a fresh certificate will be needed from the next assessment year to claim the tax benefits.
The certificates that certify the disability can be issued by a medical authority which comprises the following medical authorities:
- A Chief Medical Officer (CMO) or a civil surgeon at a public hospital
- A neurologist who holds an MD in the subject
- A pediatric neurologist (in the case of children)
Difference Between Section 80U and 80DD
Section 80U and 80DD of the Income Tax Act provides tax deductions for the people with disability. However, there are fundamental differences between the provisions included under these sections:
In Section 80DD, one who belongs to the family where an individual taxpaying citizen with a disability resides can get tax deductions. This section will be effective when a taxpayer invests under insurance premiums for taking care of the disabled person dependant on him.
Here, a dependant may refer to children of the assessee, siblings, spouse, parents, or a member of a Hindu Undivided Family (HUF). On the other hand, under Section 80U, an individual taxpayer suffering from a disability can claim tax benefits by presenting the disability certificate for himself.
Section 80U of the Income Tax has helped the taxpaying individuals suffering from disabilities lower their financial burden by providing them with tax deductions. Moreover, with the increase in a tax deduction, effective from the assessment year 2020-2021, it can be a beneficial initiative for individuals suffering from disabilities.
Therefore, if you fall into the category of a disabled taxpaying individual, do not forget to avail of the government’s tax benefits via Section 80U. And, if you come across any difficulties while going through the provisions or need help to claim tax benefits, seek help from FinGurus.