Disabled persons are allowed certain tax benefits as per the present tax laws of the country. Below in this article we have mentioned few benefits that are available specifically to a disabled person.
Deduction for Specified Diseases – Section 80U
An individual being a disabled person with specified diseases can take benefits of section 80U. To claim tax deduction the person has to be resident in India.
As section 80U talks about resident in India, a foreign citizen who is a resident in India can also take benefit of this tax deduction if he or she is a disabled person.
A flat or fixed deduction of 50000 rupees can be claimed if the person’s disability is less than 80%. If the disability is more than or equal to 80% then 100000 rupees can be claimed as tax deduction under section 80U.
Finance Budget 2015 has enhanced the tax deduction limit of section 80U for financial year 2015-2016. We suggest you to read our article to know the Detail provision of Section 80U – Tax benefits for a person with disability.
Medical Expenses for a disabled person – Section 80DD
Section 80DD allows you to claim medical expenses as tax deduction for a disabled person. If you incur any expenses for medical treatment or training or rehabilitation of a disabled person being your dependent spouse, child or parents then you are eligible to claim it as a tax deduction.
You are also eligible for tax deduction for the amount that you paid towards buying an annuity plan or lump sum payment to any insurer for the benefit of the disabled dependent.
Tax deduction for a disabled person being a member of a Hindu undivided family can also take benefit under this section. The HUF has to claim tax deduction while filling IT return only if they have spent money for medical treatment or buys a policy for the benefit of such member.
Please remember both section 80DD and 80U are mutually exclusive. You cannot claim both deductions. Only one of the two can be claimed as tax deduction.
If you are a disabled person and claimed tax deduction under section 80U then section 80DD benefits will not be available. Similarly, if being a disabled person you have claimed benefit of section 80DD then section 80U benefits will not be available to you.
Finance Budget 2015 has enhanced the tax deduction limit and allowed deduction for medical expenditure in case of very senior citizen. Please read our article to know the Detail Provision of Section 80DD – Tax Deduction for Medical treatment of handicapped dependent.
Specified Illnesses – Section 80DDB
Besides the above tax deductions if you have incurred any medical expenses for yourself or a dependent spouse, children on some specified illnesses like neurological diseases, cancer, AIDS or chronic kidney failure then the amount paid will be eligible for tax deduction under section 80DDB.
Tax deduction up to a maximum limit of 40000 rupees can be claimed under section 80DDB i.e. lower of your actual expenses or 40000 rupees will be allowed as tax deduction.
A higher tax deduction of 60000 rupees can be claimed if the person for whom expenses are incurred is a senior citizen.
If you get reimbursed for your expenses from employer or insurance company then the eligible tax deduction amount as specified under section 80DDB will be lowered in that proportion. For example; if you are reimbursed with Rs.15000 after spending Rs.25000 then Rs. 10000 (25000-15000) will be allowed as tax deduction under section 80DDB being lower of Rs. 40000 and Rs. 10000.
In Section 80DDB, finance budget 2015 has introduced higher deduction for very senior citizen. To know more please read Detail provisions of section 80DDB – Tax deduction for medical expenses of specified illnesses
A disabled person is also allowed higher transport allowance exemption of Rs. 1600 per month if he or she is working as an employee.