Section 80DD provides tax benefits to the families of disabled dependents for the purpose of caring for them. It can be claimed by caretakers who are individuals as well as by Hindu Undivided Families (HUF).
The Section 80DD provides deduction to families of disabled persons for the purpose of caring for a disabled dependent. Deductions u/s 80DD can be claimed by families of disabled dependents and not the dependents themselves. If a disabled person has already claimed deductions on an amount through Section 80U, the same amount cannot be claimed again as deductions u/s 80DD.
Section 80DD can be claimed by both HUFs and individuals who are caring for a disabled dependent. The deductions are applicable on expenses related to caring for a disabled dependent. The deduction amount will also cover insurance premium paid to specific insurers for the purpose of maintenance of a disabled dependent.
Terms for Claiming Deduction u/s 80DD
- Deductions can be claimed on insurance premiums with specific insurers as well as on expenses incurred on maintenance of a disabled dependent.
- Deduction allowed up to Rs.75,000 for taking care of disabled persons with 40% or more of one or more disability.
- Deduction allowed up to Rs.1.25 lakhs p.a. for taking care of disabled persons with 80% or more of one or more disability.
- Dependents imply spouse, children, siblings or parents of an individual or any member of the family in an HUF.
- Disabilities covered under the act include blindness, low vision, leprosy-cured, loco motor disability, hearing impairment and mental retardation.
Eligibility for Claiming Section 80DD Deductions
Individuals who have a disabled dependent including parents, spouse, siblings or children, or an HUF with a disabled family member can claim deductions u/s 80DD. The deductions cannot be claimed by non-resident Indians (NRI).
Points to Note:
- Proceeds from an insurance policy paid in case of death of the dependent to an individual will be taxable as per applicable income tax brackets.
- The deductions under 80DD and 80U are provided over and above any other deductions claimed under the various sections of the Income Tax Act, 1961.
- Deduction limits have been increased from assessment year 2015-16 for both categories of disabled persons. Limit for deductions on disabled dependents (40-80% disability) has been increased from Rs.50,000 p.a. to Rs.75,000 p.a. while that of severely disabled dependents (80% or more disability) has been increased to Rs.1.25 lakhs p.a. from Rs.1 lakh p.a.
Section 80DD and Section 80U
The section 80DD deals with providing tax deductions to individuals or HUFs for caring for a disabled dependent. Section 80U deductions can be claimed only by the disabled persons themselves. Also, any deduction already claimed by a disabled person u/s 80U cannot be claimed again through Section 80DD by his/her family members.
Claiming 80DD Benefits
Deductions under this section can be claimed by individuals and HUFs in full irrespective of the amount of expense incurred while caring for the dependent or in the form of insurance premium. Documents related to the expenses don’t have to be produced, however you will be required to submit a medical certificate authenticating the disability of your dependent from a certified medical professional as defined by the government.
FAQ'S on Section 80DD
- I have spent Rs.20,000 as expenses for caring for my disabled dependent. How much deductions can I claim u/s 80DD?
- Which forms should I fill while claiming 80DD deductions?
- What type of expenses are covered here?
- When will the new limits become operational?
You can claim the full amount of Rs.75,000 as deductions under this section for disabled dependent and Rs.1.25 lakhs for severely disabled dependents, irrespective of the amount actually spent through the year on care.
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 has to be submitted. This form has to be signed by a neurologist, paediatric neurologist (for children) or a civil surgeon or chief medical officer.
Expenses related to medical treatment, nursing, training and rehabilitation of a disabled dependent, as well as premiums paid on specified insurance plans that benefit disabled persons.
The new deduction limits for caring for both disabled and severely disabled persons has been increased w.e.f. AY 2015-16.