A Guide to Deductions for the Disabled under Section 80U

Tax Deduction for a Disabled Person

In India, there is a provision for tax deduction under Section 80U of the Income Tax Act 1961 for the disabled. This provision allows taxpayers to reduce their taxable income by a certain amount depending on their disability status, as well as their level of impairment. With the deduction permitted under this section, disabled persons can reduce their tax liability and save money for their medical expenses. You can avail of health insurance for any expensive treatment that may arise in the future.

However, understanding the eligibility criteria, the maximum deduction limit, and the process of claiming a tax deduction for disabled persons can be overwhelming for many. This guide provides a comprehensive overview of what is 80U in income tax. It also explains deductions under Section 80U including how to qualify, how to calculate the deduction amount, and how to claim.

What is 80U Deduction?

80U deduction is the special deduction allowed under the Income Tax Act 1961 for the disabled depending on the extent of disability, irrespective of their expenses. To avail of the benefit, certain eligibility criteria have to be fulfilled.

• The extent of disability of the taxpayer should be at least 40%.
• Only resident Indian taxpayers can claim the benefit. NRIs are not eligible for the benefit.
• Recognised medical authorities have to certify the disability.

Maximum Deduction Permitted under Section 80U

The maximum tax deduction for disabled persons permitted under Section 80U depends on the extent of the disability. If the disability of the taxpayer is less than 80%, the tax deduction permitted will be Rs.75,000/-. If the disability is more than 80% or in other words, if the taxpayer has a severe disability, the deduction permitted will be Rs.1,25,000/-.

Disabilities Covered under 80U Deduction

For eligibility under the 80U deduction, the disabilities are defined as follows:

• Blindness
• Locomotor disability
• Leprosy (cured)
• Mental Retardation
• Cerebral Palsy
• Hearing Impairment
• Autism
• Low Vision
• Mental Illness

You may be prescribed regular checkups to keep any of these issues under control. To secure these expenses you can buy health insurance that covers these expenses.

Calculation of Tax Liability with Section 80U Deduction

The permissible 80U deduction depends on the extent of your disability. If you have a severe disability, i.e., more than 80% disability, the deduction permitted will be Rs. 1,25,000/-. If your disability is less than 80%, the eligible deduction will be Rs. 75,000/-. The deduction is allowed under taxable income. If your income is Rs. 10.00 lakhs and you have a disability of more than 80%, the taxable income will be reduced to 10.00 lakhs minus 1.25 lakhs i.e., Rs. 8.25 lakhs

The computation of tax liability is given below:
Gross Taxable Income= Rs. 8.25 lakhs

Tax payable on income between
Rs. 2.5 lakhs to Rs. 5.00 lakhs-
5% of Rs. 2.5 lakhs= Rs. 12500.

Tax payable on income between
Rs. 5.00 lakhs and Rs. 8.75% lakhs-
20% of 3.75 lakhs= Rs. 75000.

Total Tax Payable=12500+75000=87500

Procedure To Claim Tax Deduction Under Section 80U

You will have to follow the procedure given below to claim a deduction under the provision for a tax deduction for disabled persons.

• You should submit the ITR along with the certificate issued by a competent medical authority in the prescribed form. You need not attach the document to the ITR. You will have to keep the document handy.
• The medical certificate should certify the disability suffered.
• The certificate should be in the prescribed format which is a part of Form 10-IA. You can download the form from the Income Tax Website.
• You should also have medical prescriptions and medical records ready for submission if required.

The medical certificate has a validity period. If the validity expires during a financial year, you can still avail of the deduction with the certificate for the financial year. But for the next financial year, you will have to provide a new certificate.

Medical Authorities Competent to Issue the Certificate under Section 80U

The following medical authorities are authorised to issue disability certificates for claiming an 80U deduction.

• A civil surgeon or chief medical officer in a government hospital.
• A paediatric neurologist with an MD degree in neurology, if the claim is for disabled children.
• A neurologist with an MD degree.

Difference between Section 80U, 80DD and 80DDB

Sections 80U, 80DD and 80DDB are often confusing. All the sections are provisions for a tax deduction for disabled persons. However, there is a difference between these sections as mentioned below:

• Under Section 80U, you can claim the deduction if you are disabled. Here you claim the deduction irrespective of the expenses incurred.
• Under Section 80DD, you can claim the deduction if you have a dependant with a disability. In the case of an individual, the dependant can be a spouse, siblings, children, or parents. In the case of HUF, a member of the HUF.
• Under Section 80DD, the deduction is allowed if you have incurred expenses for treatment, rehabilitation, training, or medicines.
• Under Section 80DDB, you claim a deduction for the expenses incurred for both self and dependent for specified diseases. Here again, the dependant refers to the spouse, children, parents, or siblings.

Availing of health insurance will help in case of highly expensive treatments like corrective surgeries, etc.

Conclusion

80U deduction is a specific provision provided for a tax deduction for disabled persons. The amount of deduction permitted will depend on the extent of the disability. For severe disability i.e., disability of more than 80%, the deduction permitted is Rs. 1,25,000/-. For disability of less than 80%, the deduction permitted is Rs. 75,000/-. The deduction can be claimed irrespective of expenses. To claim a deduction under Section 80U, a certificate from a competent medical authority certifying the disability has to be produced.

Reducing tax liability is one aspect of savings and securing future medical expenses is another prudent way of saving money. If you are disabled but otherwise healthy and active, you can avail of health insurance from Aditya Birla with additional features that will be beneficial to you.

Visit the Aditya Birla Website www.aditabirlacapital.com and explore their products.