Section 80U provides tax deductions for Indian residents who have 40% disability as specified by the law. There are different criteria for this and a specific set of procedures for claiming this deduction under Section 80U.
The Section 80U deals with tax deductions meant for residents of India who are categorized as disabled according to government rules. Under the Income Tax Act, 1961, any individual who has been a resident of India for the assessment year and suffers from at least 40% disability as specified by the law are eligible for deductions.
Definition of Disability
Disability is defined as at least 40% disability in a person as certified by relevant medical authorities. Persons with disability are defined according to the Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 passed by the government. Disability is primarily divided into 7 categories:
- Low Vision: Low vision applies to people with visual function impairment that can’t be corrected by a surgery but who are still capable of using their vision through assists from other devices.
- Blindness: Blindness is defined as complete absence of sight or field of vision limitation by an angle of 20 degrees or worse, or visual acuity less than 6160 after corrective lenses.
- Hearing Impairment: Hearing power loss of at least 60 decibels.
- Leprosy Cured: People cured of leprosy but who have lost sensation in feet or hands and paresis in eyelid and eye. Also senior people or people with extreme deformities that obstruct them from performing any beneficial occupation.
- Mental Retardation: People who have incomplete or arrested development of mental capacities resulting in subnormal intelligence levels.
- Loco Motor Disability: People with severely limited movements of limbs due to disability of joint muscles or bones.
- Mental Illness: Other mental disorders not relating to mental retardation.
The law also defines severe disability apart from disability. Severe disability refers to the condition where a person suffers from 80% or more disabilities in the aforementioned categories. Severe disability has also come to include multiple disabilities, cerebral palsy and autism.
Deductions under Section 80U
The deductions under Section 80U are available for Rs.1.25 lakhs in case of severe disability and Rs.75,000 for people with disabilities. These limits have been enhanced from the previous limits of Rs.1 lakh for severe disability and Rs.50,000 for disability. The changes have come into effect from the assessment year 2020-21.
How do I Claim Section 80U Benefits?
There are no documentation requirements apart from a certificate from a recognized medical authority certifying the disability. There is no need to produce bills or other items incurred as cost of treatment or any other expenses. You are required to fill different forms in case of mental illnesses and some more disabilities. Similarly, for cerebral palsy and autism form 10-IA has to be filled.
To file the claim, you need to submit the medical certificate denoting the disability as well as return of income certificate as per Section 139 for the relevant assessment year. If the disability assessment certificate has expired, you will still be able to claim deductions in the year of expiry of the certificate. However, a fresh certificate will be required from the next year onwards to claim benefits under Section 80U. Certificates can be obtained from medical authorities as authorized by the government which can include a MD in Neurology, paediatric neurologist Chief Medical Officer (CMO) or Civil Surgeon at a government hospital.
What is the Difference between Sections 80U and 80DD?
Section 80U provides tax deductions to persons of disability while Section 80DD provides deductions to the family members of a disabled person. Section 80DD is also applicable if the person has deposited some amount as insurance premium for caring for a dependent disabled person. The deduction limits are same as Section 80U. Dependent implies any member of a Hindu Unified Family (HUF) or an individual’s siblings, parents, spouse or children.