While paying income tax is a civic duty, having to give up a chunk of one’s income can be a financial burden. And people with disabilities may already have to bear steep expenses for long-term medical care. For them, the tax load can be especially challenging.
Fortunately, the Income Tax Act (ITA) allows income tax deductions under various sections. Section 80U, in particular addresses the needs of individuals with disabling health conditions.
What is the stipulation under Section 80U?
Section 80C of the ITA, 1961, provides tax benefits to people suffering from specified disabilities. As per current tax laws, Indian citizens with at least 40% disability can benefit from Section 80U.
Certification of disability from a medical authority is essential for income tax deductions under 80U. The taxpayer must have been a resident of India for the assessment year to claim such deductions.
This benefit is not to be mistaken for the provisions under Section 80DD. Tax benefits under Section 80DD are applicable if the taxpayer’s dependent family member has any disability.
What are the disabilities eligible for income tax deductions under 80U?
According to the Persons with Disability Act, 1955, people suffering from at least 40% impairment due to the following ailments are considered as disabled:
Blindness (complete absence of vision/ limitation of the field of vision by a 20-degree angle or worse/lower visual acuity than 6160 even with the use of corrective lenses)
Hearing loss (Loss of hearing power of at least 60 decibels)
Leprosy (cured) (Leprosy patients now recovered but have lost sensations in hands or feet/suffering from paresis in eye and eyelid/aged individuals with extreme structural deformity preventing them from pursuing a useful occupation)
Locomotor disability (severe limitation of movement)
Low vision (a poor vision that surgery cannot correct but vision possible with the assistance of devices)
Mental infirmity (mental disorders other than retardation)
Mental retardation (arrested development of cognitive capacities leading to less than average intelligence)
The disability act also defines severe disability. It involves conditions where the impairment is 80% or more. Also, individuals with multiple disabilities are considered severely disabled.
What are the limits of income tax deductions under Section 80U?
For taxpayers with at least 40% disability: Such individuals can claim deductions up to ₹75,000 from their taxable income under Section 80U.
For taxpayers with severe disability: Individuals with either 80% or more disability or multiple disabilities are eligible for deductions up to ₹1.25 lakhs.
How to claim income tax deductions under 80U?
Disabled taxpayers need to submit a certificate that confirms their disability. A recognized medical authority must issue the certificate in Form 10-IA. Approved medical professionals include:
- Neurologists having a Doctor of Medicine (MD) in Neurology
- A civil surgeon
- The Chief Medical Officer in a government hospital in India
- Medical bills supporting treatment costs or related expenses are not needed.
Claiming the deduction:
The taxpayer must provide the disability certificate along with the relevant assessment year’s ITR, as per Section 139. If the certificate expires, the individual can still claim deductions in the same year as the expiry date. However, a new certificate is essential to claim the Section 80U benefits in the subsequent years.
Availing income tax deductions can reduce the tax outgo to a significant extent. Knowing the applicable limits and the process to claim the benefits enable taxpayers to take full advantage of the available reliefs.