Section 80DD Deduction Limit pertains to those individuals who have a disabled person dependent on her/him. The genesis of the thought of having a separate section is that medical expenses of a disabled person are generally very high, and inflation in medical costs makes it even steeper by the year. For some families, it is a high and unavoidable expense. India’s infrastructure in general is a challenge for the disabled and that makes it even more difficult for them to be fully independent. Keeping these in mind, the Government of India has allowed those who have a disabled dependent to claim Section 80DD Deduction Limit. There are some clear conditions under which this is available. So do read carefully.
Section 80DD Deduction Limit – Disabilities that qualify
Not all disabilities are included. There are only the following 9 specific disabilities that qualify for Section 80DD Deduction Limit. Do note them carefully and check if it holds true in your case.
|Section 80DD – Disabilities Included|
|Disabilities included||Autism||Low vision||Hearing impairment||Locomotor disability|
|Cerebral palsy||Mental illness||Leprosy-cured||Multiple disabilities|
|Cognitive or mental disability /retardation|
|Disabled||A person with 40% of at least one of the above disabilities|
|Severely Disabled||A person with at least two of the above disabilities or 80% of at least one of the above.|
Section 80DD – Extent of Deduction in a Financial Year
The limits up to which the tax-payer can claim benefits under Section 80DD depend on the extent of disability of the dependant.
|Category||Definition||Section 80DD Deduction Limit|
|Disabled||A person with 40% of at least one from the list of disabilities||75,000 per annum|
|Severely Disabled||A person with at least two from the list of disabilities or 80% of at least one from the list.||1,25,000 per annum|
Section 80DD Deduction limit – Who is eligible to claim
- Any Indian Resident individual or HUF (Hindu Undivided Family).
- NRIs cannot claim Section 80DD deduction.
Section 80DD Deduction limit – What is the definition of ‘Dependant’
- For individuals, your spouse, son / daughter (any child), parents and brother / sister (siblings) can be your handicapped dependants.
- For HUFs, any member of the HUF can be a disabled dependant.
- The disabled person should be wholly or mainly dependant on you for his / her support and maintenance, and should not have claimed deduction under section 80U, i.e. deductions that are claimed by the disabled person themselves.
Section 80DD Deduction – What expenses can be claimed
- Expenses incurred for the medical treatment of only the disabled person can be claimed under this section. Such expenses could be towards medicines, hospitalization, consultation, diagnostic tests,
In addition to the above, effective from FY 2015-2016, medical expenses of octogenarians, nonagenarians and centenarians, can be included. That is, medical cost is allowed for deduction under Section 80D for very senior citizens beyond 80 years of age. This is available up to the entire limit of 30,000 (explained below). This benefit is allowed only if they are not covered by any health insurance policy.
- Premium or any money paid to Unit Trust of India or any insurance company for the purpose of buying specified scheme or insurance for the purpose of maintenance of a disabled dependant.
Section 80DD Deduction – Insurance Policies that can be included in 80DD benefit
LIC Jeevan Vishwas
- This policy which is for the benefits of parents or guardian of person with physical disabilities qualifies for Section 80DD Deduction Limit. This policy ensures that the dependant person with physical handicap does not have to depend on anybody for financial support in case something happens to his parent or guardian. LIC Jeevan Vishwas is a with profits plan. In this policy, the life of the person, on whom the handicapped person is dependant, is insured. In case the dependant (i.e. the disable person) dies before the guardian/parent, the parent/guardian will have the option to either keep the policy for a reduced paid-up sum assured or is entitled to receive the refund of premiums paid. But the main benefit is that if the parent/guardian dies before the dependant, 20% of the Sum Assured is paid to the disabled person instantly. Moreover, the remaining 80% is paid to her/him through monthly annuity (pension) for 15 years guaranteed, and if she/he survives even after that, the pension is paid till the end of her/his life.
Health Insurance cover provided by National Trust
- This policy is also included for Section 80DD Deduction Limit through the “Niramaya” health Insurance scheme for persons with disabilities like autism, cerebral palsy and mental retardation etc. Under this scheme, for those who have family income of less than Rs. 15,000 per month, the cost is Rs. 250 per year. For those with a family income of more than Rs. 15,000 per month is required to pay Rs. 500 annually. For the families which are Below Poverty Line (BPL) this scheme is free, provided the applicant holds the BPL card. This scheme covers health expenses up to a limit of Rs. 100,000 per year for the person suffering from these disabilities. The scheme is administered by National Trust in collaboration with ICICI Lombard General Insurance. Under this scheme even existing disease are covered without any medical check up. Moreover this plan covers routine expenses like medical check up, transportation and corrective surgery etc. which are not covered under regular health insurance products.
Section 80DD Deduction – How to make the claim
- You need to produce only a certificate of disability from specified medical authorities for claiming the deductions.
- In case of dependents with cerebral palsy, autism or multiple disabilities, Form 10-IA needs to be submitted. This form has to be signed by a neurologist, pediatric neurologist (for children) or a civil surgeon or chief medical officer.
Section 80DD Deduction – Issuing the Medical Certificate
- The medical certificate can be issued by a Neurologist having a degree of Doctor of Medicine (MD) in Neurology (or, in case of children, a Pediatric Neurologist having an equivalent degree)
- It can also be issued by a civil surgeon or Chief Medical Officer (CMO) of a government hospital.
- NRIs cannot avail of Section 80DD Deduction limit tax benefit.
Section 80DD – Points to Note before Claiming Deduction
- Not all schemes qualify – there are specific schemes meant for this purpose. The policy has to insure your life. i.e. it should be in your name.
- Premium is required to be paid on annual basis or a lump sum amount for the benefit of the disabled dependant.
- Nomination of Policy should be in the name of (a) your disabled dependant, or (b) any other person or trust that would receive the money for the benefit of your disabled dependant.
- You do not have to preserve the actual receipts for expenses incurred. However you will have to produce the actual receipts in case you claim deduction in respect of payment made to LIC, UTI etc for the purpose of buying insurance or other schemes for maintenance of such dependant.
- You need to furnish a self-declaration certifying the expenditure incurred on account of medical treatment (including nursing), training and rehabilitation of the handicapped dependant.