Medical expenses incurred by an individual is eligible for various income tax deductions under different sections of Income Tax Act, 1961. One of such section is called section 80DD.
Medical expenses for treatment of a dependent who is a person with disability is eligible for income tax deduction under section 80DD if it meets all the conditions as specified in this section under income tax act 1961.
In this article we will be discussing provisions related to medical treatment of handicapped dependent (i.e. dependent with disability) as per section 80DD.
The taxpayer who is claiming medical expenses as a income tax deduction under section 80DD for his or her handicapped dependent should be an individual or a Hindu Undivided Family.
The individual should be resident in India. Foreign citizens can take benefit of section 80DD if they are resident in India and have incurred expenses towards medical treatment of the handicapped dependent.
To claim tax deduction, the assessee must satisfy two basic conditions as specified under section 80DD;
- He or she or the HUF must be a resident in India and
- Must have incurred expenses towards medical treatment of handicapped dependent (i.e. dependent with disability).
If you are a non-resident Indian then tax deduction under section 80DD is not available to you as the first basic condition mentioned in section 80DD of being resident in India does not fulfilled.
Which Medical Expenses are eligible for tax Deduction – Section 80DD
A taxpayer availing the benefit of section 80DD for the medical expenses of the handicapped dependent (i.e. dependent with disability) can claim tax deduction for any of the options or both the options mentioned below;
- Medical expenses incurred by the taxpayer for the treatment (including nursing), training and rehabilitation of such handicapped dependent (being a person with disability).
- Amount paid or deposited under a scheme framed for the benefit of handicapped dependent by LIC or other insurer approved by the Board for the maintenance of such handicapped dependent ((being a person with disability). Such scheme should provide the benefit of payment of a lump sum amount for the benefit of the dependent in the event of your death.
For the second option the taxpayer either can nominate the dependent being a person with disability or any other person or a trust to receive the payment on his behalf for the benefit of such dependent.
If the handicapped dependent predeceases then an amount equal to the amount paid or deposited as stated above shall be deemed to the income of the assessee of the previous year in which such amount is received and shall accordingly be chargeable to income tax.
Who are dependent to claim income tax benefits – Section 80DD
If you are a salaried employee or self employed or any other individual then for you, dependent means your spouse, children, parents, brother and sisters. In the case of a Hindu undivided family (HUF) dependent means any member of such family.
The dependent person should be wholly dependent on the taxpayer who is availing the income tax benefit under section 80DD.
Tax Deduction Limits
- A fixed deduction of Rs. 75, 000 can be claimed if you satisfy the conditions of section 80DD of income tax Act, 1961. This limit has been increased in budget 2015 to Rs 75000 from the earlier limit of Rs 50000. From assessment year 2016-2017 onwards tax deduction under section 80DD is Rs 75000. For assessment year 2015-2016, tax deduction under section 80DD is Rs 50000.
- A higher deduction of Rs 1, 25,000 can be claimed under section 80DD if the dependent has severe disability (disability of 80% or above). In budget 2015, the earlier limit of Rs 100000 has been increased to Rs 125000. This means, from assessment year 2016-2017 onwards tax deduction under section 80DD for a dependent with severe disability is Rs 125000. For assessment year 2015-2016, tax deduction under section 80DD is Rs 100000.
Above tax deduction can be claimed irrespective of the amount you spent on your handicapped dependent i.e. if you incurred a lesser expenditure then you can claim tax deduction under section 80DD as mentioned above.
Other relevant conditions for getting tax deduction under section 80DD
- To claim tax deduction under section 80DD, the dependent should not have claimed any other deduction under section 80U of Income Tax Act, 1961.
- The taxpayer has to furnish a copy of the certificate issued by the medical authority. This certificate is not required to be submitted along with return of income.
- The person claiming medical expenses of handicapped dependent as a tax benefit has to provide a self declaration stating the expenses he incurred for the purpose of section 80DD deduction.
Assessee has to keep the certificate and declaration with himself and if asked then need to be submitted to tax department. If assesee is in employment then both certification and declaration are to be submitted to employer stating that expenses are incurred towards medical treatment of dependent who has disability.
Medical authority means any hospital or institution specified by notification by the appropriate government for the purpose of the persons with Disabilities.