Section 80DD Deduction

To claim, an individual must submit medical certificates and other essential documents as mentioned under the provision.

This policy provides relief to the lower and middle stratus of the Indian society by allowing them to avail themselves of tax benefits on the medical expenses incurred on the dependent family member. 

Before one goes into further details, it is important to understand that the income tax has changes in rates and minor amendments but the legal or relief aspect had to be based on the the 1961, as of now.

Eligibility of Claim Deduction under Section 80DD

To be eligible for the claim deduction under the section 80DD, one must:

• Be an Individual or be a part of a Hindu undivided family, who is a resident in India.
• This deduction is not available to non-resident Indian (NRI), since a lot of countries such as Canada, largely help their residents when it comes to medical treatment.

Documents Required to Claim Deduction Under Section 80DD 

The following are the documents that are essential to claim tax deduction under Section 80DD of Income Tac Act, 1961: 

1. Medical certificates: To claim tax deduction, taxpayers must provide medical certificates to authenticate the disability of the dependent. 

1. Self-Declaration Certificate: This must be produced to claim tax deduction which will represent the expenses incurred by the taxpayer on the medical treatment of the disabled dependent. 
2. Form10-IA: Form No. 10-IA must be submitted by the taxpayer if the dependent member is suffering from multiple disabilities, cerebral palsy, or autism. 
3. Insurance premium receipt: If claim is made against insurance policies taken for the disabled dependent, then, actual receipt should be submitted. 

Expenses that are Deducted for Income Tax Calculation

The following are the expenses that are exempted for income tax under section 80DD:

• Any expenses incurred for medical treatment which includes nursing, training as well as rehabilitation of dependent that is disabled.
• The amount paid towards Life Insurance Corporation (LIC), Unit Trust of India or any of the other insurers for the sole purpose of buying specified schemes or insurance policies to help in the maintenance of a dependent with disabilities.

Who is Defined as Disabled Dependent According to Income Tax laws?

If a person, falls under the following circumstances, he or she is eligible to be called a disabled dependent under section 80DD and hence the person's caretaker can avail the income deductions:

1. Individuals, or a spouse, son or daughter (or any child), parents as well as brother or sister i.e. any siblings can be considered as your disabled dependent.
2. This is applicable for any hindu undivided Family which means that any member of the HUF can be a disabled dependent.
3. It is essential that the disabled individual be wholly or mostly dependent on the taxed for their support as well as maintenance.
4. He or she should also not claim the deduction under section 80U.

What kind of Disability or Severe Disability is considered under the Section 80DD?

Disability for Section DD is defined under clause (i) of section 2 by the "Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995" as well as disabilities includes in clauses (a), (c) and (h) of section 2 of National Trust for welfare of Person with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.

Hence this includes the following disabilities:

• Cognitive or severe mental disabilities
• Low vision
• Blindness
• Leprosy-cured
• Hearing impairment
• Locomotor disability
• Mental illness
• Autism
• Cerebral palsy
• Or Multiple disabilities

It is essential to note that person must not suffer less than 40% of any of the above disabilities. When it comes to sever disability 80% or above of one or more of the mentioned illnesses or disabilities is considered.

Other Things to Note For Claim Deduction

The following are some of the important points that should be remembered to claim tax deduction under Section 80DD: 

• A medical certificate is mandatory when one wishes to claim the deduction with respect to the mentioned disabilities from any Government Hospital. The document should certify the disability of the dependent and the person they are dependent on. The certificate needs to be renewed periodically.
• Individuals suffering from Autism, Cerebral Palsy or any multiple disabilities, would require form number 10-IA to be filled and submitted for them.
• There are also 2 formats other than the one mentioned earlier, for an individual who is suffering from any sort of severe mental illnesses and the rest of the disabilities.
• Individuals also have to submit a self declaration, signed and certifying the expenses incurred pertaining to the medical treatment which includes nursing, rehabilitation as well as training of the disabled dependent.
• It is not required to preserve the actual receipts for the disabled dependents expenses. But the actual receipts need to be submitted in case the claim deduction with respect of payment made to any insurer such as LIC, UTI and others for getting insurance plans or schemes for the maintenance of the disabled dependant.

Where can you avail a Medical Certificate for the Disabled Dependent?

According to the income tax laws the following people can help you get a medical certificate to claim ta deductions under section 80DD:

1. A neurologist with a Doctor of Medicine (MD) degree in Neurology or a Pediatric Neurologist with a similar degree for children.
2. A Civil Surgeon or a Chief Medical Officer (CMO) of any government hospital.

Tax Deduction Under Section 80DD For Disabled Dependents

Before going forward it is essential to understand that in the case that a disabled dependent dies before the taxed individual he or she will be taxed for the premium amount paid in that year, since this would be treated as the survivor's income for that year and hence be completely taxable.

1. The income tax deduction which is allowed, under section 80DD is Rs. 50,000 for what is defined earlier as disabled dependent (40% and over disability) This limit went upto Rs. 75,000 since 2016.
2. The income tax deduction which is allowed, under section 80DD is Rs. 50,000 for what is defined earlier as severely disabled dependent (80% and over disability) This limit went upto Rs. 1,25,000 since 2016.
3. Deduction is not dependent on the amount of expenses incurred regardless the real expenses disabled dependent relative is lesser than amount mentioned above, the tax assessed will be eligible for the full deduction.

Conditions for Tax Deduction under 80DD

The following are the conditions to avail tax deductions under Section 80DD: 

1. People need to produce a hard copy of the medical certificate stating disability as issued by the central or state government medical board to make the deduction claim.
2. The insurance plan should be in the tax assessor's name and also must be a Life insurance policy and not a health insurance policy. It could also pay annuity or simple lump sum amount as death benefit for the disabled dependent in the case of your untimely death.
3. In case the disabled dependent dies earlier than the taxed, the policy amount is returned to him or her and hence would be treated as income and hence taxed for income.