Tax treat for the differently abled

Did you know you can claim tax benefits if you are caring for a family member who is differently abled? Tax laws recognise your hardship and allow you to claim deductions from your gross income. 

Before we go ahead with explaining these deductions in detail, note that these are allowed to taxpayers, who are resident Indians. These can be claimed by a resident, or a resident but not ordinarily resident person, who may be an Indian or foreign citizen. The deductions cannot be claimed by non-resident Indians.

Let’s understand how you can claim these:

Deduction for maintenance, including medical treatment of a handicapped dependent under section 80DD: This deduction is allowed to an individual and can also be claimed by a HUF. An individual can claim this deduction for his dependant spouse, children, parents, brothers and sisters, who suffer from a disability. A HUF can claim this deduction for a member. In case the disabled dependent has claimed deduction for self under section 80U, an individual taxpayer caring for such a dependant is not allowed to claim this deduction. To be able to claim this deduction, the tax payer must have incurred expenses for medical treatment (including nursing), training and rehabilitation of a disabled dependant.

The disability. which can be claimed must be as per definition under section 2 (i) of the Persons of Disabilities Act, 1995. Also, disability should not be less than 40%. A certificate of disability must be obtained from a medical authority. Since no document can be attached or submitted with your tax return, this certificate must be kept safely by the taxpayer, should the assessing officer require it at a later date.

Deduction for financial year 2014-15: For a disability of 40% to 80%, a fixed deduction of Rs 50,000 can be claimed. For disability exceeding 80%, a fixed deduction of Rs 1,00,000 can be claimed. Deduction for financial year 2015-16: Rs 50,000 has been revised to Rs 75,000 and Rs 1,00,000 to Rs 1,25,000.

Deduction for money spent on medical treatment of a specified ailment or disease for taxpayer himself or for a dependant under section 80DDB: While section 80DD is allowed only for dependants, this deduction can be claimed by a taxpayer for his own treatment as well. An individual can claim this deduction for self or a dependant spouse, children, parents, brothers and sisters. A HUF can claim this deduction for a member of the HUF.

This deduction can be claimed for neurological diseases, where disability is 40% or more, dementia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia, parkinsons disease or malignant cancers, AIDS, chronic renal failure, hematological disorders such as hemophilia and thalassaemia.

To be able to claim this deduction, tax payer must obtain a certificate from a prescribed authority, i.e. from a specialist doctor. In this regard, CBDT recently issued a circular with details of how to obtain a certificate. Patients getting treated in a private hospital are not required to take the certificate from a government hospital. Patients receiving treatment in a government hospital have to take certificate from any specialist working full-time in that hospital. Such specialist must have a post-graduate degree in General or Internal Medicine or any equivalent degree, which is recognised by the Medical Council of India. Certificate in Form 10I is no longer required.

For financial year 2014-15: A deduction of Rs 40,000, or the amount actually paid, whichever is less can be claimed. In case of the person for whom deduction is being claimed (self or dependant) is a senior citizen, a deduction of Rs 60,000 or amount actually paid, whichever is less can be claimed.

In financial year 2015-16: An additional deduction was added for very senior citizens. A maximum of Rs 80,000 can be claimed.

Deduction available to an individual suffering from disability under section 80U: This deduction is allowed only to an individual and not an HUF. It can be claimed by the tax payer who is suffering from specified disability in his own tax return. Disability such as blindness, low vision, leprosy-cured, hearing impairment, loco motor disability, mental retardation, mental illness are defined under the section. And the disability must not be less than 40%. A certificate is required from a medical authority. Deduction for financial year 2014-15: If disability is 40% or more but less than 80% - fixed deduction of Rs 50,000 (irrespective of the actual amount incurred or deposited) is allowed. Where disability is 80% or more, a fixed deduction of Rs 1,00,000 can be claimed.

Deduction for financial year 2015-16: Amount of Rs 75,000 can be claimed instead of Rs 50,000. And, Rs 1,00,000 has been enhanced to Rs 1,25,000.