Government has specified certain investments and expenses as tax deductible while calculating income tax liability of an individual. Anyone fulfilling these specified criteria can take benefit of tax deductions.
Medical expenses of handicapped depended is one of such expenses which is allowed as a income tax deduction under section 80DD of income tax act 1961 . It’s applicable to an individual who has spent money for medical expenses on behalf of a handicapped dependent.
However, to take tax deduction under section 80DD, the individual has to be a resident of India. As the income tax act is silent on foreign citizen and Indian citizen, a resident foreign citizen will also be eligible for income tax deduction under section 80DD.
A Hindu Undivided Family can also take benefit of section 80DD. If any one of the family member is handicapped and the HUF has spent money on medical expenses of such handicapped dependent then it can be allowed as tax deduction.
Meaning of medical expenses spent for handicapped dependent
To get eligible for section 80DD deduction, medical expenses should have been incurred for the medical treatment of a dependent with disability as specified in rule 11A and as defined under section 2(i) of the person with disability act, 1995.
The amount should have been paid towards medical treatment, training and rehabilitation of a dependent with disability as discussed above.
If you have paid or deposited in a scheme of LIC or with some other insurer for the maintenance of dependent then you will also be eligible for tax deduction under section 80DD.
Meaning of Dependent for the purpose of section 80DD tax deduction
Section 80DD can be claimed only when you have spent money for medical expenses of handicapped dependent.
If money has been spent for any other person, then you can’t claim tax deduction under section 80DD. For this reason, it’s very important to know the meaning of dependent as defined under section 80DD;
For an individual, dependent means spouse, children, parents, brothers and sisters of the individual or any one of them who are wholly or mainly dependent upon such individual for support and maintenance.
For a Hindu Undivided Family, dependent means any member of the HUF.
If you are a handicapped then tax deduction can be claimed under section 80U but not under section 80DD. Section 80DD is specifically applicable to the amount spent on handicapped dependent with disability for their medical treatment.
Quantum of tax deduction under section 80DD
Tax deduction under section 80DD is a fixed amount.
If the disability is less than 80% then a fixed tax deduction of 75,000 rupees is allowed otherwise you can claim 1,25,000 rupees as tax deduction.
In other words, if disability of the above dependent is 80% or more, then tax deduction allowed under section 80DD is Rs. 1,25,000.
How to claim Tax deduction under section 80DD
To claim tax deduction under section 80DD, you are required to collect a certificate from an approved hospital or institution. If the conditions of disability require reassessment then another certificate as renewal to the old certificate has to be obtained.
As per the present law, you are not required to send the certificate along with your return of income. You have to keep it with yourself after claiming the deduction. If asked in future, then you are required to produce it before the authority.
However, employees are required to submit a copy of the certificate along with their self declaration form while filing with their employer at the year end.
Update: With effect from financial year 2022-23, deduction under section 80DD(1) to be allowed even if the annuity to a disabled person is released during the life time of the insured in the event of attaining the age of 60 years or more by such individual or the member of the HUF in whose name subscription to the scheme has been made.
