Taxexcel: Section 80U

The Income Tax Act allows deductions from your gross total income, before the levy of tax, if medical expenditure has been incurred on the treatment of a differently-abled person. Sections 80DD and 80U of the Income Tax Act deals with the medical expenditure incurred for this purpose.

However, Though the working of these two deductions is the same, according to income tax rules, these cannot be claimed simultaneously. In other words, Section 80DD and Section 80U of the Income Tax Act allows a deduction for the medical expenses incurred for differently-abled persons. The amount of deduction is the same for both the sections. However, Section 80DD can be claimed by the person who has incurred expenses for the dependent differently-abled person. On the other hand, 80U can be claimed by the individual if he/she, himself/herself, is differently-abled. If the individual is claiming deduction under section 80U, then no other person can claim deduction under section 80DD for the aforesaid person.

Download Automated 100 Employees Income Tax Revised Form 16 Part A&B for F.Y.2019-20 [This Excel Utility can prepare at a time 100 Employees Revised Form 16 Part A&B ]

Here is everything you need to know about claiming deductions under both sections 80DD and 80U.

Who can claim the deduction?
For instance, as mentioned above, deduction under section 80DD can be claimed by a resident individual who has incurred expenditure on the training, rehabilitation, medical treatment of a differently-abled or disabled dependent person.

The income tax law defines a dependent person like spouse, children, parents, brother and sisters of the individual who is fully dependent on the individual for the support and maintenance Above all,

The deduction can also be claimed if payment or deposit has been made by an individual under any scheme of Life Insurance Corporation (LIC), or any other the insurer or any other specified scheme or deposit for the maintenance of the dependent. In addition,

The scheme should provide the annuity or lump-sum benefit in the event of the death of the individual for the maintenance of the dependent person suffering from disability

Conditions for claiming deduction
After that, the deduction under either section 80DD or 80U can be claimed only if the individual himself or dependent is suffering from disability, autism, cerebral palsy or multiple disabilities.

Similarly,the percentage of disability should not be less than 40 per cent in order to be eligible to claim deduction under these sections. In case you are claiming the deduction allowed for severe disability, then the disability level should be a minimum 80 per cent.

Download Automated 50 Employees Income Tax Revised Form 16 Part A&B for F.Y. 2019-20 [This Excel Utility can prepare at a time 50 Employees Revised Form 16 Part A&B ]

To avoid the rejection of the claim for deduction by the income tax department, one must also satisfy the definition of disability, autism, cerebral palsy or multiple disabilities as per the act governing the same.

Disability is defined as per the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1955. As per Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, disability is defined as someone who is suffering from blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism, cerebral palsy and multiple disabilities. A person with a disability.

Similarly, autism, cerebral palsy and multiple disabilities take their meaning from the National Trust for the welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999. Multiple disabilities can be defined as the person suffering from a combination of two or more disabilities as defined in Person with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.

Download Automated 50 Employees Income Tax Revised Form 16 Part B With Form 12 BA for F.Y. 2019-20 [This Excel Utility can prepare at a time 50 Employees Revised Form 16 Part B With 12 BA ]

Amount of deduction depends on disability, not expenses & age
The amount of deduction that can be claimed depends on the percentage of disability. If the individual or dependent has 40 per cent or more disability but less than 80 per cent, then the deduction of Rs75,000 can be claimed in a financial year.

In case of severe disability, i.e., if the percentage of disability exceeds 80 per cent, then the deduction of Rs 1.25 lakh is allowed.

The amount of deduction depends on the percentage of disability. The deduction claimed is fixed irrespective of the actual expenses. Therefore, even if the actual expenses are less than Rs 75,000 or Rs 1.25 lakh as applicable, you can still claim the mentioned amount.

Documents required
To claim this deduction, either under Section 80DD or Section 80U, one is required to provide a certificate of disability. As per the income tax laws to claim the deduction, one is required to obtain a certificate in the prescribed manner as mentioned in Form 10-IA. The certificate must be obtained from the prescribed medical authority.

Download Automated One by One Preparation Excel Based Income Tax Revised Form 16 Part A&B for F.Y. 2019-20 [This Excel Utility can prepare One by One Revised Form 16 Part A&B ]

In conclusion, the medical authority is required to issue the disability certificate shall be a neurologist having a degree of Doctor of Medicine in Neurology (in case of children, a Pediatric Neurologist having an equivalent degree) or a civil surgeon or chief medical officer in a Government hospital.

Source From Economics Times

Share It

No Comments

1. No Hike in basic exemption Tax limit

The first disappointment comes in the form of no increase in the basic exemption limit. This means the tax slab will remain same for the financial year 2015-16 i.e. assessment year 2106-17 but the surcharge rate of 10% is increased to 12% for the tax payers having income above Rs.1 crore. This increment in the surcharge rate is made to compensate the income from the abolished wealth tax.

2. Section 80C ceiling limit remains Rs.1.50 lakhs per annum

With the inclusion of Sukanya Samriddhi Account Max limit Rs.1.5 Lakh and equity oriented pension funds Max Rs.1.5 Lakh, there was an inevitable need of expanding the threshold limit of section 80C but that did not happen. Section 80C remains intact in budget 2015.

3. Rise in the Health Insurance Premium paid u/s 80D

To spread the health care awareness among individual tax payers, section 80D has been amended by increasing the deduction limit for the premium paid for health insurance to Rs.25,000 for non-senior individuals (earlier Rs.15,000) and Rs.30,000 for senior citizens (earlier Rs.20,000). For super senior citizens (80 years or more) who are not eligible for health insurance get some relief in terms of deduction towards their medical expenses up to Rs.30,000 per year.

4. Additional Tax-Savings under Section 80DD, Section 80DDB and Section 80U

In view of the steep rise in the cost of the medical care, Government has increased deduction limit under section 80U and section 80DD by Rs.25,000 i.e. medical expense of disabled individual and dependent on Individual, from existing Rs.50,000 to Rs.75,000 and in case of severe disability the addition amounts to Rs.50,000 i.e. from existing Rs.1,00,000 to Rs.1,50,000.

Further, Government has also given additional tax sop of Rs.20,000 (from Rs.60,000 to Rs.80,000) on the medical treatment of some specific diseases such as cancer, AIDS etc. for very senior citizens (aged 80 years or more) under section 80DDB.

5. Transport Allowance Doubled

The transport allowance cost has witnessed some sharp increase and to cope up with that Government has doubled the transport allowance from existing Rs.800 per month to Rs.1,600 per month which totaled to Rs.19,200 per year.

6. Home Loan Interest Deductions remains Intact

The limit of home loan interest deduction u/s 24 was hiked in the interim budget last year to Rs.2 lakhs. But with the rising cost of property, there was a need of increasing this deduction limit to Rs.3 lakhs which was not met. So the ceiling limit of home loan interest for the self-occupied property remains intact at Rs.2 lakhs per year under section 24(b).

7. National Pension Scheme u/s 80CCD increased by Rs.50,000

Investments towards National Pension Scheme has got some additional tax sops of Rs.50,000 over and above the Section 80C ceiling limit of Rs.1.50 lakhs.

Deduction limit of investment towards pension plans, annuity plans and new pension scheme is hiked to Rs.1.50 lakhs from earlier threshold limit of Rs.1 lakhs. In the previous budget, the limit of section 80C was hiked but the deduction limit for pension plans capped to Rs.1 lakh only; now, budget 2015 has removed that anomaly.

Summary of all Deductions

8. Service tax rate increased to 14%

A major hit to the common men comes in the guise of service tax. Budget 2015-16 has hiked the service tax rate from existing 12.36 to 14%. This means now every service such as eating food outside, paying your mobile or gymnasium bills etc. would attract extra tax.