Section 80DD

Example

Suppose Riya, a resident Indian, spends ₹60,000 annually for her father’s medical treatment (who has a disability of 40% or more). She can claim a flat deduction of ₹75,000 under Section 80DD, regardless of the actual amount spent. If her father's disability is 80% or more, the deduction increases to ₹1,25,000.

Key Components

• Eligible Taxpayers: Only resident individuals and HUFs are eligible.

• Eligible Dependents: The deduction applies to a spouse, children, parents, or siblings (for individuals); any member of HUFs.

• Disability Criteria: At least 40% disability, certified by a recognized medical authority. If the disability is severe (80% or more), the deduction increases.

• Deduction Amounts:

  • ₹75,000 for disabilities between 40% and 79%.

  • ₹1,25,000 for severe disabilities (80% or more).

• Covered Expenses: Medical treatment, nursing, training, rehabilitation, or premiums paid for approved insurance schemes.

• Required Documents: A valid disability certificate, expense receipts, and insurance premium proof (if applicable).

• Exclusions: Not available to Non-Resident Indians (NRIs) and cannot be claimed if the dependent claims a deduction under Section 80U.

Benefits

• Substantial Tax Relief: Offers a fixed, predictable deduction, making it easier for families to plan financially.

• Supports Families: Helps families manage the costs of caring for a disabled dependent.

• Covers a Range of Disabilities: Applies to various disabilities, including physical, mental, and multiple disabilities (e.g., blindness, cerebral palsy, autism, etc.).

Challenges

• Documentation: Requires a valid and periodically renewed disability certificate to claim the deduction.

• Exclusivity: The deduction is not available if the dependent claims a deduction under Section 80U or if the taxpayer is an NRI.

• Old Regime Only: This deduction is available only under the old tax regime, limiting flexibility for those opting for the new tax regime.

• Proof of Dependency: The taxpayer must prove that the dependent is financially reliant on him or her to claim the deduction.

Conclusion

Section 80DD offers significant tax relief for families supporting disabled dependents by covering expenses for medical treatment, rehabilitation, and insurance premiums. Although it has specific eligibility criteria and documentation requirements, it provides an essential financial cushion for families caring for a loved one with a disability.