Section 80DD Of The Income Tax Act: Terms And Conditions, Eligibility And Documents Required
Even though there has been a substantial improvement noticed in the healthcare management of India, medical inflation remains a matter of concern for the citizens. Especially in the case of patients suffering from ailments that require long-term treatment, like people with disabilities, the medical expenses often become difficult to tackle.
Thankfully, the Income Tax Act allows individuals to save taxes by claiming deductions under Section 80DD of the Income Tax Act. This particular section applies to the treatment of differently-abled patients. Read on to know more about it!
Who Will Be Eligible to Claim Deductions u/s 80DD?
The eligibility parameters are pretty basic for Section 80DD of the Income Tax Act, 1961. Following are the people who can claim 80DD deduction:
- Any Indian resident having medical or insurance-related expenditures for dependents who are differently-abled
- Individuals belonging to an HUF or Hindu Undivided Family and incur expenses for differently-abled individuals related to medical or insurance purposes
Note that such deductions are available only if the dependent’s medical condition matches any of the following:
- Mental illness
- Blindness and impaired vision
- Autism
- Locomotor disability
- Cerebral palsy
- Leprosy-cured
- Mental retardation
- Hearing impairment
Now that you know who will be eligible for claiming an 80DD deduction, you should know the terms and conditions associated with it.
Conditions Related to Section 80DD Deductions
Here are some conditions one must keep in mind before claiming deductions under Section 80DD of the Income Tax Act:
- The 80DD deductions can be only claimed for the dependents of the taxpayers, such as their spouse, sisters or brothers, and not for themselves.
- It is not possible to claim deductions by the taxpayer if the dependent has already availed tax benefits under this section for himself/herself.
- Taxpayers can claim an 80DD deduction if they incur expenses for the treatment, training and rehabilitation of the dependent or if they have made any contribution towards a certain insurance plan. Note that it cannot be a health insurance policy but a life insurance plan specially designed for these cases to be eligible for such benefits.
- The dependent’s disability should be at least 40% and defined u/s 2(i) of the Persons of Disabilities Act, 1995.
Apart from meeting the above-mentioned conditions, you also need to ensure that all the necessary documents are ready with you.
Documents to Submit to Claim Deductions u/s 80DD
Here is a list of documents you must keep handy before claiming the 80DD deduction:
- A hard copy of the medical certificate elaborating on the dependent’s health condition will be required to avail of tax benefits under this section.
- It is necessary for taxpayers to submit a self-declaration certificate as well. In this certificate, he/she has to mention all the expenses related to the treatment (from rehabilitation to nursing) of the dependent.
- Since you are already mentioning most of the information regarding the expenditures in the self-declaration certificate, it is not necessary to present the actual receipts. However, in case you are claiming deductions for paying the insurance premium under the dependent’s name, it is advisable to keep those receipts.
- Form 10-1A will be necessary in case the dependent is suffering from disabilities like cerebral palsy, autism, etc.
If you have already met all the requirements as per the norms of Section 80DD of ITA, it’s time to know about the deduction amount available for you.
How Much Can You Claim under Section 80DD?
Individuals meeting the required eligibility criteria can claim these deductions:
- Rs. 75,000, where the dependent’s disability ranges between 40%-80%. This starts from FY 2015-16 (earlier, for FY 2014-15 or before, it was Rs. 50,000).
- Rs. 1,25,000, where the dependent’s disability goes beyond 80%. This starts from FY 2015-16 (earlier, for FY 2014-15 or before, it was Rs. 1,00,000).
Note that these exemptions are available to eligible patients irrespective of the main expenditure.
Also read: Section 80G of the Income Tax Act
Final Word
All these facilities under Section 80DD of the Income Tax Act, 1961 seem extremely helpful for taxpayers. That said, those opting for the new tax regime have to forgo these benefits. The new tax regime updated from Financial Year 2020-21 announces that tax deductions or exemptions under specific sections of ITA, including 80DD, will not be available. However, you can still choose the old/existing tax regime and enjoy these benefits.
Frequently Asked Questions
Ans: As per the laws of the Income Tax Act, India, you can acquire the medical certificate from the following persons and submit it to claim deductions under Section 80DD:
> A Chief Medical Officer (CMO) or a Civil Surgeon of any government hospital
> A Neurologist possessing a degree in Neurology (Doctor of Medicine degree) or a Paediatric Neurologist holding an equivalent degree for children
Ans: No, as per the norms of Section 80DD of the Income Tax Act, one can only avail of tax benefits under this provision if he/she is a resident of India. Therefore, it will not be applicable to Non-Resident Indians or NRIs.
Ans: Even though both these sections of the IT Act deal with the same aspect (tax benefits available for the medical expenditure for differently-abled patients), you cannot avail both simultaneously. Also, there is a slight difference most taxpayers fail to notice regarding Section 80DD and 80U.
The former can be claimed by a taxpayer who pays the medical expenses of a differently-abled dependent. However, the latter is claimed by individuals who themselves are differently abled.
Ans: No, this particular section of the Income Tax Act, 1961 does not apply to non-resident individuals or NRIs. To avail of tax benefits u/s 80DD, you must be a resident of India and meet the necessary eligibility criteria.
Ans: No, that will not be possible. The deductions will not be available in case you fail to submit the current disability certificate. To avail of tax benefits on the medical expenditures, you must obtain a new certificate from the medical professional.
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