Section 80DD of income tax
Section 80DD is the deduction available for the medical treatment of a handicapped dependant.
The conditions to claim this deduction include:
- Incurred expenditure for the medical treatment (including nursing), training and rehabilitation of disabled dependents.
- Paid/deposited amount under a scheme approved by CBDT, framed in this behalf by the Life Insurance Corporation, Unit Trust of India or any other insurance company giving policy specifically meant for taking care of the dependent.
- However, it should be noted that if the taxpayer is already claiming tax under Section 80U, then Section 80DD would not be applicable.
Terms and conditions for section 80DD
- Resident Individuals and HUF can claim deductions for the disabled dependent. NRI’s are not eligible for this deduction.
- In the case of an individual, dependent can be any family member like spouse, children, parents, brothers and sisters of the taxpayer. While for HUF dependent can be any member of HUF.
- Dependency can be understood as the disabled individual is wholly or to a large extent dependent on the assessee for their support.
- Tax-payers cannot claim deduction for the medical expenditure on themselves under this Section
- There should be either expenditure for the medical treatment of dependent or deposit of any amount under the scheme of LIC or another insurer as discussed above.
- The assessee, claiming a deduction under this section, shall furnish a copy of the certificate issued by the medical authority in Form 10IA.
Dependents under section 80DD
For the purpose of section 80DD dependents means:
- Spouse
- Children
- Siblings
- Parents
- Member of HUF
- For claiming the deduction, the above-mentioned individuals should be completely or majorly dependent upon the taxpayer for their support and maintenance.
Amount of deduction under section 80DD
This section provides fixed deduction, it does not depend on the age and the amount of expenditure. In the case of:
- Normal Disability( i.e. at least 40%) the deduction allowed from gross total income is Rs. 75,000.
- Severe Disability (i.e. 80% or more) the deduction allowed from gross total income is Rs.1,25,000.
- Full deduction can be claimed under Section 80DD even if the actual expenses on the said disabled dependant are less than the mentioned amount.
Medical certificate is required under section 80DD
For claiming deduction under section 80DD medical certificate from an authorised medical practitioner is required. The following persons are deemed credible for such a certificate.
- A neurologist with a Doctor of Medicine (MD) degree in Neurology.
- A Pediatric Neurologist for children having a degree equivalent to neurologist in MD.
- A Civil Surgeon or a Chief Medical Officer (CMO) from any Government hospital.
- Thus, it simply implies that if you are taking the deduction under this section then keep the certificate with you which you can take from the Authorized medical Practitioner.
Also, it is suggested that the medical prescription and medical records be kept safe in case the income tax department asks for the same in future.
The disability certificate has a specified validity. If the validity of the certificate expires in any financial year, the deduction for that financial year can be claimed using the expired certificate. However, from the next financial year, a new certificate would have to be availed for claiming deduction under Section 80DD in the next year.
Difference between Section 80U and Section 80DD
While most of the benefits remain the same for Section 80U and Section 80DD. The basic difference is that while under Section 80U, the individual certified with a disability can claim the tax benefit but in Section 80DD, the tax benefit is claimed by the taxpayer who bears the expense of the entire medical treatment of the individual who is defined as the disabled dependent.
