80U Deduction offers tax deductions for residents that have at least 40% disability as specified by the law. There are varied criteria for this and a specific set of processes to claim a deduction under Section 80U of the Income Tax Act.
The Income Tax Rebate for Physically Handicapped 80U primarily deals with tax deductions meant for Indian residents who can be categorized as disabled based on the government's rules.
Under the Income Tax Act, 1961, any individual who has been a resident of the country for the year of the assessment year and suffers from at least 40% disability as specified by the law is eligible for the deductions.
Disability is known to be at least 40% in a person who is certified by the relevant medical authorities. Persons with disabilities are defined based on the Persons with Disability Act of 1995, which was passed by the government.
Disability is divided into seven parts or categories:
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1) Blindness |
Blindness is defined as total loss of vision, a field of vision restriction of 20 degrees or more, or visual acuity of less than 6160 after corrective lenses. |
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2) Low Vision |
Low vision refers to individuals who have impaired eyesight that cannot be treated surgically but who are nevertheless able to use their vision with the use of various equipment. |
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3) Leprosy Cured |
Leprosy patients who have been cured but still have paresis in their eyelids and hands, foot, or other extremities. Additionally, elderly folks and those with severe physical disabilities prevent them from completing any useful work. |
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4) Hearing Impairment |
Loss of hearing power of at least 60 decibels. |
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5) Mental Illnesses |
Different mental illnesses are unrelated to mental retardation. |
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6) Retardation |
Individuals with subnormal intelligence levels whose mental growth is either inadequate or halted. |
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7) Locomotor Disability |
Individuals whose joints, muscles, or bones significantly limit their range of motion. |
In addition to defining severe disability, the law also defines disability. When a person has 80% or more of the difficulties mentioned above, it is considered to be a severe disability. Multiple impairments, cerebral palsy, and autism have also become severe disabilities.
The Section 80U deduction limit as per the Income Tax Act is-
In case an individual is suffering from at least 40% disability, he or she can claim a deduction of tax of up to Rs 75,000 on the taxable income.
In case an individual is suffering from a severe disability (suffering 80% disability, either from one or multiple ailments) can claim a tax deduction of up to Rs 1,25,000.
Resident individuals who are certified by the medical authority to be a person with a disability claim this deduction for themselves only. The resident status can determine eligibility for the deduction. Non-residents are not eligible for this deduction.
Family members and close relatives of the taxpayer with a handicap are eligible for tax deductions under Section 80DD, whereas the taxpayer with a disability himself is eligible for deductions under Section 80U.
If a taxpayer pays a specific amount as an insurance premium to care for a dependent disabled person, then section 80DD applies. The deduction caps under section 80DD are the same as those for section 80U. A dependent in this context is any of the assessee's siblings, parents, spouse, kids, or other members of a Hindu Unified Family.
The person who claims the deduction needs to be furnished with a copy of the certificate that is issued by the medical authority in the prescribed ITR. There is typically no document required to be attached with ITR, and it is advised to keep it handy.
No additional evidence is needed in order to claim the tax benefits provided by Section 80U, aside from the disability certificate signed by a recognized medical authority and submitted in Form 10-IA. You can claim the tax deduction without submitting any bills or information about the treatments you received.
According to Section 139, the disability certificate must be presented with the income tax returns for the applicable AY. Even though the certificate has passed its expiration date, you may still deduct the cost in the year of the expiration.
To claim tax benefits under 80U, you will require a new certificate beginning the next year.
The medical authorities who are eligible for issuing a disability certificate could be the following: