How to Get Tax Deduction Under 80DD?

Introduction

One of the most incredible things about the income tax regime in India is the fact that it allows for several deductions and exemptions under various heads. These provisions not only help you save on the income tax but also help in building your financial portfolio in a way that you are able to include all the important elements in it. It takes care of your life insurance premium, health insurance premium, donations and other expenditures and fees, interests and payments that make for a robust financial standing.

When you invest in certain financial instruments, or save for the future under specific schemes, or pay for insurance, you are allowed deductions at the time of income tax calculation. The Income Tax Act, 1961 lays down all these provisions under various sections and the amounts are determined each year along with the annual budget.

One such provision is tax deduction under 80DD of the Income Tax Act. Largely, it allows deductions for the medical expenses that are incurred towards the treatment of differently-abled individuals. The recent budget has allowed for options between the new and the old tax regime. Please note that if you opt for the new tax regime, these deductions will no longer be applicable to you.

Let us explore this section in detail.

Eligibility requirements for tax deduction under 80DD
 

• The first and foremost eligibility filter under Section 80DD is that this deduction is available for Indian residents only, whether they are an individual or a part of a Hindu Undivided Family (HUF).
• Apart from the primary individual-level eligibility, specific expenses can be claimed. One is expenses related to the medical care of a disabled dependent. This medical care and treatment encompass nursing treatment, training costs, and rehabilitation of the disabled dependent.
• It also includes insurance for such dependents. The amount of premium paid towards a life insurance policy or similar schemes for the maintenance of a dependent with disabilities can also be claimed as a deduction for tax computation. For example, if you buy a ULIP plan from Canara HSBC Life Insurance, a unit-linked life insurance plan with multiple investment choices and life cover benefit, then you will be able to claim the deduction under Section 80DD.

1. Dependent: We have been using the term dependent in the context of this section. This term is also specifically defined. If you are a caretaker of a person who is:
   • Mental disabilities and/or illness
   • Someone on the spectrum - either autism or cerebral palsy
   • Blindness or Low vision
   • Hearing impairment
   • Locomotor disability
2. Either your spouse, sibling (brother or sister), parent, child (son or daughter), and is
3. Disabled to the extent that they are dependent on you for support as well as maintenance, as far as the financial aspect of life is concerned, OR
4. In the case of a Hindu Undivided Family (HUF), any member of the HUF can be a disabled dependent.
5. The disabilities included for this section are defined by the “Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 and the National Trust for welfare of Person with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999. These include:

Amount of Deduction for Rehabilitation of Handicapped Dependent Relative

As mentioned, Section 80DD covers medical treatment expenditure, rehabilitation, and training of a disabled dependent. How much deduction is allowed depends upon the extent of disability. There is a fixed tax rebate of ₹ 75,000 for a disability that is classified in 40%-80% range. This goes further up as disability gets severe. An amount of ₹ 1.25 lakh is deductible in case of a severe disability.

Remember that in order to claim this deduction successfully, you will be required to furnish the appropriate paperwork. This could include the medical certificates, medical bills, reports and any other documents that support the case. The medical certificates need to be issued by a government hospital and they are required to be periodically renewed. This certificate can be provided by either a neurologist who has a degree (Doctor of Medicine or MD) in Neurology, a Pediatric Neurologist, a civil surgeon or a Chief Medical officer of a government hospital or clinic.