The Income Tax Act permits deductions from your general gross income, earlier than the levy of the tax if medical expenditure has been incurred on the treatment of an in a different way abled man or woman. Sections 80DD and 80U of the Income Tax Act offers with the clinical expenditure incurred for this purpose.
Though the working of these two deductions is equal, one needs to take into account that those cannot be claimed concurrently. Abhishek Soni, CEO, tax2win.In, a tax-submitting internet site says, “Section 80DD and Section 80U of the Income Tax Act allows a deduction for the scientific fees incurred for otherwise abled individuals. The quantity of deduction is identical for both the sections. However, Section 80DD may be claimed using the person who has incurred fees for the based in another way-abled character. On the other hand, 80U may be claimed by using the man or woman if he/she, himself/herself, is in another way abled. If the person is claiming deduction under phase 80U, then the no different person can declare deduction below phase 80DD for the character above.”
Here is the whole lot you need to recognize approximately claiming deduction below each sections 80DD and 80U.
Who can declare the deduction?
As mentioned above, deduction underneath phase 80DD may be claimed by a resident person who has incurred expenditure at the training, rehabilitation, medical treatment of an in a different way-abled or disabled established individual.
The earnings tax law defines a based character as a partner, youngsters, parents, brother and sisters of the person who is absolutely dependant at the man or woman for the support and protection.
“The deduction can also be claimed if a fee or deposit has been made by way of the man or woman under any scheme of Life Insurance Corporation (LIC), or some other insurer or every other specific scheme or deposit for the maintenance of the structured. The scheme needs to provide the annuity or lump-sum benefit within the event of the death of the person for the maintenance of the based man or woman suffering from a disability,” says Soni.
Conditions for claiming the deduction
The deduction underneath either segment 80DD or 80U can be claimed handiest if the individual himself or established is affected by disability, autism, cerebral palsy or multiple disabilities.
The percentage of disability ought to no longer be less than 40 percent to be eligible to claim deduction below these sections. In case you’re claiming the deduction allowed for extreme disability, then the incapacity level has to be minimal eighty percent.
To avoid the rejection of the declares for deduction by the profits tax department, one has also to satisfy the definition of incapacity, autism, cerebral palsy or multiple disabilities as according to the act governing the equal.
Disability is described as consistent with the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1955. Soni says, “As in step with Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, incapacity is defined as someone who is suffering with blindness, low imaginative and prescient, leprosy-cured, hearing impairment, locomotor incapacity, intellectual retardation, intellectual contamination, autism, cerebral palsy and a couple of disabilities. A person with disability method someone laid low with not much less than forty in line with a cent of any incapacity as certified by way of scientific authority.”
Similarly, autism, cerebral palsy and more than one disabilities take their meaning from the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities Act, 1999. Soni says, “Multiple disabilities can be described as the person tormented by an aggregate of or more disabilities as described in Person with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.”
Amount of deduction depends on incapacity, not expenses & age
The amount of inference that may be claimed depends on the proportion of inability. If the man or woman or structured has forty in step with a cent or other disability but much less than 80 consistent with cent, then the deduction of Rs seventy-five,000 may be claimed in a monetary yr.
In case of severe disability, i.E., if the share of incapacity exceeds 80 according to the cent, then the deduction of Rs 1.25 lakh is authorized.
Soni says, “The quantity of deduction depends on the share of incapacity. The deduction claimed is constant irrespective of the real costs. Therefore, despite the fact that the real expenses are less than Rs 75,000 or Rs 1.25 lakh as applicable, you could still declare the cited quantity”.
To declare this deduction, either below Section 80DD or Section 80U, one is needed to provide a certificate of incapacity. Soni says, “As in step with the income tax laws to say deduction, one is required to acquire a certificate in the prescribed way as noted in Form 10-IA. The certificate has to be received from the prescribed medical authority.”
The clinical authority who’s required to issue the incapacity certificate shall be a neurologist having a degree of Doctor of Medicine in Neurology (in case of youngsters, a pediatric Neurologist having an equivalent diploma) or a local healthcare professional or chief medical officer in a Government health facility.
“No deduction can be allowed from the financial 12 months from which the disability certificates has expired, except new certificates is acquired from the aforesaid scientific authority,” says Soni.