Section 80DD of the Income Tax Act provides deductions for individuals or Hindu Undivided Families (HUFs) who have dependents with a disability. Here are the key aspects of Section 80DD:
Eligibility: To be eligible for deductions under Section 80DD, the following conditions must be satisfied:
- The taxpayer should be an individual or HUF.
- The taxpayer should have incurred expenses on the medical treatment, maintenance, and rehabilitation of a dependent with a disability.
- The dependent should be a spouse, child, parent, brother, or sister of the taxpayer.
Disability Criteria: The dependent should have at least 40% of any of the following disabilities:
- Blindness or low vision
- Hearing impairment
- Locomotor disability
- Mental retardation
- Mental illness
Dependents Covered: The deduction is available for dependents, which includes the spouse, children, parents, brothers, or sisters of the taxpayer. The dependent must have a disability as specified by the Act.
Certification Requirement: To claim the deduction, the taxpayer needs to obtain a disability certificate from a prescribed medical authority. The certificate should specify the extent and nature of the disability.
Deduction in Case of Death: In the unfortunate event of the dependent’s death, if the taxpayer had paid any annuity or lump sum amount for the maintenance of the dependent, the deduction can be claimed in the year of payment.
Documentation and Recordkeeping: It is important to maintain supporting documents such as medical bills, receipts, disability certificates, and other relevant documents to substantiate the expenses incurred and to claim the deduction.
Amount of Deduction: The deduction available under Section 80DD is as follows:
- For disabilities ranging from 40% to 80%, a fixed deduction of Rs. 75,000 can be claimed.
- For severe disabilities (more than 80%), the deduction amount is increased to Rs. 1,25,000.
In conclusion, Section 80DD of the Income Tax Act provides a tax benefit to individuals or HUFs who bear expenses related to the medical treatment, maintenance, and rehabilitation of dependents with disabilities. By claiming deductions under this section, taxpayers can reduce their taxable income, thereby lowering their tax liability.