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When you have a disabled person in a family, there are bound to be certain necessary expenses that you must incur in the care and well-being of that person. Looking at the extent of such expenses, the Indian law has made them tax-free to support such families in managing their budgets well.
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Let us look at the eligibility, claim deduction, and other features of this section in this post.
As discussed above, section 80DD is a deduction associated with people with disability. This section provides tax exemptions for maintenance, including medical treatment of a dependent member of a family with disability. Thus, this section supports families in caring for a disabled member without financial challenges.
You may note that the deductions under section 80DD can be claimed only by the family of the disabled person and not the disabled individual. So, if any deduction has been claimed by the disabled under any other section of income tax, section 80DD will not be applicable.
Also Read: Income Tax Saving Investments Under Section 80EE, 80C, 80D
Under section 80DD, anyone who is challenged in terms of physical or mental capability to perform the tasks or activities that a normal person easily performs is regarded as a disabled person.
Tax exemption offered to the family of people with disabilities under this section depends on the percentage of disability of the concerned person.
Income tax deductions under section 80DD can be claimed by taxpayers belonging to HUFs or Hindu Undivided Families as well as by other resident Indians with a disabled person in the family. The exemptions can be claimed for expenses incurred in caring for disabled individuals, including health insurance premiums paid towards healthcare, medicine, and overall maintenance of the disabled person.
Section 80DD of the Income Tax Act allows a fixed deduction amount regardless of the expenditure. However, the exact amount to be deducted would depend on the level of disability and its severity.
If the disability is above 40% and below 80%, the maximum deduction available is INR 75,000. On the other hand, if the disability is above 80%, the maximum deduction available is INR 1,25,000.
As per the Income Tax Act of 1961, the permitted deduction limit under section 80DD is up to INR 75,000. However, this is applicable for families with a member who has a disability of up to 40%. If the disability is up to 80% and above, the exemption claim can be made up to INR 1.25 lakhs per annum u/s 80DD for the maintenance and care of a disabled person.
The dependent under this category can be your spouse, parents, siblings, children, or any other member of the family coming under a HUF.
Below are some conditions to meet to be eligible to avail of this deduction:
The following documents are required to claim tax benefits under Section 80DD:
Here is a list of disabilities included under section 80DD for which tax deductions can be claimed:
The key difference between section 80DD and section 80U is that section 80U allows disabled persons to claim tax deductions for themselves, while under section 80DD, tax deductions can be incurred by the family of the disabled person on their healthcare expenses.
On the other hand, under section 80DD, the family of the insured cannot claim tax exemptions if the disabled person has already availed of tax exemptions under other sections like 80U.
Conclusion
Deduction under section 80DD is offered for the expenses incurred for the maintenance of a disabled person, including medical treatment. You may avail of this deduction to manage your budget in case you have a differently-abled dependent in your family.
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The expenses covered under section 80DD include medical care and maintenance of the disabled dependent. It includes medical expenses, therapy, and other costs, like nursing, etc., for the disabled.
No, there are no such forms to be filled out to claim deductions under section 80DD. All you need is to submit a medical certificate from the medical authorities to prove the disability.
You can claim a deduction of up to INR 75,000 for a disability of up to 40% and up to INR 1,25,000 for disability above 80%, regardless of the expenditure.
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