Section 80DD of the Income Tax Act, 1961 offers tax deductions regarding the medical treatment and maintenance of a dependent with disability. Under this section, the taxpayer can claim a deduction in respect of expenses incurred for the medical treatment and maintenance of a dependant who is a person with disability. The taxpayer’s parent, spouse, or child can be considered as the dependant. The deduction is available to both resident and non-resident individuals against their incomes liable to tax.
Under Section 80DD, a deduction of Rs. 75,000 is allowed for medical treatment and maintenance of a dependant with a disability for which a Medical Certificate should be obtained. The medical certificate should be obtained from a prescribed medical authority in India such as a Neuro-physician, a Psychiatrist, or an Institution recognized by the government for the treatment of disability. For a severe disability, an additional deduction of Rs. 1,25,000 is allowed over and above the deduction of Rs. 75,000. Section 80DD of the Income Tax Act is applicable to both resident and non-resident individuals.
The primary eligibility criteria for claiming a deduction under Section 80DD is that one must have a dependant with a disability to whom the taxpayer is paying expenses for medical treatment or for the maintenance. The dependant should fall into the following categories –
- A taxpayer’s spouse,
- A taxpayer’s parent, or
- A taxpayer’s child.
The dependant should have a disability that is certified by a prescribed medical authority in the field of neuro-psychiatry or a recognized institution for the treatment of the specific disability.
In the case of a severe disability, the disability should be certified by a certified medical practitioner. A severe disability means that the dependant has a physical or mental disability which is certified as a severe disability by a medical authority. The following disabilities could be classified as a severe disability under Section 80DD –
- Blindness,
- Low Vision,
- Leprosy,
- Hearing Impairment,
- Loco Motor Disability, and
- Mental Illness.
If the dependant is parent of the taxpayer, the income of the parent should not exceed Rs. 2,50,000 in the current assessment year. If the parent’s income exceeds Rs. 2,50,000, then deduction under Section 80DD would be reduced. Similarly, in the case of a dependant child, the income of the child should not exceed Rs. 2,50,000 to claim deduction under Section 80DD.
The medical expenses can include costs of medical treatment, drugs, surgery, hospitalization, nursing, and so on. The deduction can also include cost incurred for the maintenance, medical insurance premiums, vocational training, and other costs related to the disability of the dependant. Furthermore, if a dependant with disability is admitted to any hospital, home, or an institution maintained by a local authority, then the institution’s expenditure can also be claimed as a deduction.
The deduction under Section 80DD is available only to those taxpayers whose total income is taxable under the Income Tax Act. According to the Section, the taxpayer should maintain records that contain proper evidence to prove that the expenses were incurred for medical treatment of the dependant or for the maintenance of the dependant whose disability is certified by a prescribed medical authority. The records should be maintained in a manner that satisfies the assessing authority of the income tax department.
The deduction under Section 80DD is allowed up to the amount of expenditure incurred for medical treatment or maintenance of a dependant with disability. The amount of deduction cannot exceed the amount of total expenses or expenditure incurred. It should also be noted that the taxpayer cannot claim any deduction for the amounts which are reimbursed by the employer or under any health insurance policy or any other insurance policy.
Section 80DD provides tax deductions to taxpayers who have dependents with disabilities and incur expenditure on medical treatment and maintenance of such dependents. Taxpayers should meet the eligibility criteria of Section 80DD and must maintain proper evidence to prove that the expenses incurred were for medical treatment or maintenance of a dependant with disability for availing the deductions.
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Disclaimer: “Neither this article nor the information contained herein shall in any way be construed as forming a contract or shall constitute professional advice required before acting upon any matter. CA Sharad Kumar Sharma has taken all due care in the preparation of this article for accuracy in its contents at the time of publication. However, no liability shall be accepted by him in the event of any direct, indirect or consequential damages arising out of or in any way connected with the use of this article or its contents. “
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