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What is Section 80DD of the Income Tax Act?

To reduce your tax burden, Section 80DD of the Income Tax Act allows deductions for expenses incurred towards a wholly dependent family member with a disability.

  • 2,178 Views | Updated on: Mar 21, 2024

Indian law provides some relief through income tax deductions under specific conditions. Section 80DD of the Income Tax Act specifically addresses this, offering tax breaks related to the maintenance and medical treatment of dependent persons with disabilities.

Medical care, as you know, has skyrocketed in price. For a family’s breadwinner, juggling responsibility for both their family and a dependent member who requires constant care can feel impossible. Funding necessary medical services for that member feels even more daunting.

However, Section 80DD of the Income Tax Act allows you to reduce your taxable income by claiming deductions for expenses incurred on your dependent’s medical care. This means significant tax savings, freeing up resources to focus on what matters most – your loved one’s well-being.

What is Section 80DD?

Section 80DD offers a helping hand to families supporting a disabled member. It allows individual taxpayers and Hindu Undivided Families (HUFs) to claim deductions on their taxable income for expenses related to the care of a disabled dependent. This means you can reduce your tax burden while ensuring your loved one receives proper care.

What are the Benefits of Section 80DD?

Like any other section with tax benefits, Section 80DD helps in saving money and offers other advantages. Take a look at a few of them:

Reduces Taxable Income

Claiming deductions under Section 80DD can lower your taxable income, reducing your overall tax liability. This can translate into significant savings, especially for individuals with high incomes.

Promotes Inclusivity and Social Welfare

By offering tax benefits for supporting disabled individuals, Section 80DD encourages taxpayers to contribute to the well-being of this community. This can lead to greater social inclusivity and improved resource access for disabled people.

Raises Awareness about Disability Issues

The existence of Section 80DD highlights the challenges faced by families with disabled members and encourages public discourse on disability rights and accessibility. This can pave the way for more comprehensive support systems for the disabled community.

Who can Benefit from Section 80DD?

If you are an individual, part of a Hindu Undivided Family (HUF), or someone providing for a disabled family member, you may be eligible for tax deductions under section 80DD. This means you can reduce your taxable income and potentially lower your tax burden.

This includes essential expenses like medical bills, medication, and even special equipment they might need. Plus, certain insurance premiums paid for their care can also be deducted.

The amount you can deduct depends on the level of disability. For someone with a disability up to 40%, the deduction limit is ₹75,000 per year. But if they have a disability of 80% or more, you can claim up to ₹1.25 lakhs annually.

What are the Eligibility Criteria for Claiming Deductions Under Section 80DD?

To claim tax benefits under Section 80DD for caring for a disabled family member, keep these points in mind:

  • You can only claim deductions to reduce your taxes if you support someone with a disability.
  • If the disabled person has already claimed their own tax benefits, you cannot claim them again under Section 80DD.
  • Your spouse, children, parents, or siblings are eligible. Additionally, anyone under the care and protection of your joint family (Hindu Undivided Family) can qualify.
  • Only medical expenses like treatments, nursing, or rehabilitation count towards the deduction.
  • The disability must be at least 40% for you to claim deductions.
  • These deductions are a fixed amount, meaning you can claim them even if your actual expenses are less.

Documents for Claiming Deductions Under Section 80DD

To claim tax benefits under Section 80DD for caring for a disabled dependent, you will need some documents to prove your eligibility:

  • Medical Certificate: This proves your dependent’s disability. A recognized medical authority should issue it.
  • Form 10-IA: Required only for autism, cerebral palsy, or multiple disabilities. You can download and fill it out online.
  • Self-Declaration Certificate: Briefly stating the medical expenses (treatment, nursing, rehabilitation, training) incurred for your dependent. No proof is needed for most expenses.
  • Insurance Premium Receipts: If you claim deductions for insurance policies covering your dependent’s needs, keep the original receipts as proof.

Facts About Section 80DD

Apart from tax benefits, there are some interesting facts about Section 80DD. Let us take a quick look at them:

Life Insurance Payouts for Deceased Dependents

If you receive money from an insurance policy for a dependent who passed away, this amount may be taxed based on your regular income tax bracket.

Section 80DD is a Bonus

You can claim deductions under Section 80DD along with any other deductions you qualify for under other sections of the Income Tax Act.

Deduction Limits have Increased

Since 2015-2016, the standard deduction limit has gone up from ₹50,000 to ₹75,000. And for individuals with severe disabilities, the limit has increased even further, from ₹1 lakh to ₹1.25 lakhs.

To Sum it Up

Section 80DD offers tax reductions by lowering taxable income and eases the financial strain on caregivers of disabled persons. It also encourages contributions to the well-being of the disabled community by providing them with financial support. But by understanding your rights and responsibilities, you can ensure you and your loved ones receive the full benefits under Section 80DD.

Key Takeaways

  • Section 80DD of the Income Tax Act provides a crucial financial lifeline for families supporting a disabled member, promoting their well-being and social integration.
  • You need a medical certificate, Form 10-IA, self-declaration certificate, and insurance premium receipts as proof for availing benefits under Section 80DD.
  • You can combine Section 80DD deductions with other eligible deductions to take advantage of increased deduction limits (₹75,000 for standard disabilities and ₹1.25 lakhs for severe disabilities).
  • You are eligible for other deductions under other sections of the Income Tax Act, along with deductions under Section 80DD.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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