Section 80U of Income Tax Act: Deductions for Disabled Person (AY 2023-24)￼
The Income Tax Act of 1961 has certain sections for the benefit of specific individuals. It helps to reduce the overall tax burden for those individuals. One such section is Section 80U of the IT Act. Section 80U provides tax deductions and rebates for persons with disabilities or physically-handicapped individuals.
In this article, you’ll learn everything about section 80U, its meaning, eligibility, deduction limit & amount. Further, you can also check the difference between sec 80U and sec 80D.
What is Section 80U?
As per Section 80U of the Income Tax Act 1961, if a resident individual has been certified disabled by any authorised medical authority, they can claim tax deductions. A person with a disability can claim a deduction of ₹75,000. A person with a severe disability can claim a deduction of ₹1,25,000.
Now, to understand who can be classified as a disabled person, you need to understand these essential clauses:
- A person must have at least 40% disability.
- A person with a severe disability must have 80% disability.
The disability under section 80U includes Hearing Impairment, Locomotor disability, Mental Retardation, Blindness, Leprosy (cured), etc.
Thus, if you wish to claim your deduction under Section 80U, you must submit a copy of a medical certificate in the prescribed format when filing an income tax return.
Definition of Disability as per Section 80U of the Income Tax Act:
Persons with Disability (Equal Opportunities, Protection of Rights and Full) Act, 1995 specifies that a person certified by the medical authority with 40% disability is defined as disabled.
This includes the following types of disabilities:
Any individual with minimal vision, a lack of sight by 20 degrees, or whose vision is not above 6160 even after using lenses is categorised in this disability category. Individuals under the above conditions are eligible for tax exemption under this section.
- Minimal Vision:
Minimal vision is a condition when a person has an incurable vision impairment even after surgery. But they can use their vision with the help of specific devices. This is a permanent condition and irreversible. So, people with minimal vision are also classified as disabled and can qualify for a tax exemption under Section 80U.
- Leprosy Cured:
This includes people who have suffered from past leprosy but have recovered. But people who face problems functioning with their eyes, hand or feet are defined as disabled under the Persons with Disability Act 1995. They qualify for a tax exemption under Section 80U.
This also applies to individuals and senior citizens with severe deformities because they can’t work anymore and thus earn their living.
- Hearing impairment:
An individual with a hearing impairment is considered disabled if his hearing capacity is restricted to 60 decibels.
- Locomotor disability:
Individuals who have a disability in their legs fall under Section 80U. Disabilities regarding bones, muscles and joints also fall under this category.
- Mental retardation:
Individuals with limited or incomplete mental development fall under this disability category. This is an intellectual functioning disorder wherein the disabled individual cannot perform daily activities independently and needs assistance. So, all individuals suffering from this ailment can claim a tax exemption under Section 80U.
Autism Spectrum Disorder (ASD) is a developmental disorder wherein the differences are caused only in the brain. Autistic people have social anxiety or poor social interactive skills and often have repeated behaviours with restricted interaction. They have concerns about paying attention for a longer duration and have different learning methods. So, people with autism can claim a tax exemption under Section 80U.
- Cerebral palsy:
This disorder of movements usually appears in the very early stages of childhood. Poor muscle coordination, stiffness, tremors, etc., are common symptoms of this disorder. Individuals with cerebral palsy have concerns with sensation, listening, speaking and vision. Individuals with CP or cerebral palsy can claim a tax exemption under Section 80U.
- Mental illness:
Apart from mental retardation, a mental disorder is defined as a disability per the Persons with Disability Act 1955. Multiple categories of mental ailments are classified under this Act, and individuals meeting the criteria can claim a tax exemption under Section 80U.
In addition to the disabilities mentioned above, this section also covers severe disabilities. Individuals with multiple disabilities, such as autism and cerebral palsy, are categorised as having a severe disability.
Benefits of Section 80U
- This section reduces the tax liability of disabled persons.
- Disabled individuals can save money by getting tax deductions under this act.
- You don’t have to provide many documents to claim a deduction under this act. Only a medical certificate is required.
- It also covers individuals who have autism, cerebral palsy etc.
Who is Eligible to Claim Deduction under Section 80U?
An individual certified by a medical authority as a person with a disability can file a claim for a deduction under this section. Only a resident individual can get the benefit. NRIs don’t qualify for this deduction.
What requirements are needed to claim a deduction under Section 80U?
The requirements to claim deductions under this act are minimal. You just need to submit a medical certificate which certifies the disability. It should be issued by a recognised medical authority or concern in Form 10-IA. There is no need to produce any medical bills incurred during the treatment of the disability.
Which Medical Authorities can issue Medical Certificates?
Medical authorities can provide a medical certificate of disability. They can be –
- A neurologist with a degree of MD (Doctor of Medicine) in Neurology
- A neurologist specialising in paediatrics with a relevant qualification (for children)
- A civil surgeon
- A Chief Medical Officer (CMO) in a government hospital
How to Claim Deduction Under Sec 80U?
The deduction can be claimed by filing income tax returns as per Section 139 of the assessment year, along with a medical certificate mentioning the disability. In case of the expiry of the certificate, you can still claim the deduction. But you must produce the fresh certificate in the subsequent year to claim the benefit.
At times, the disability may be temporary. It requires re-assessment at certain time intervals. In such a case, the certificate’s validity is calculated from the start of the assessment year in which the certificate was issued. It ends in the financial year in which the certificate would expire.
How does Section 80U differ from Section 80DD?
This is a common question most people have. However, you need to understand that the primary purposes of both sections are entirely different. Section 80DD and Section 80U deal with benefits for disability, but both sections differ. You can claim a tax deduction under Section 80DD for the kin and family members of the taxpayer if they have any kind of disability. On the other hand, Section 80U provides a tax deduction to an individual taxpayer with a disability.
Section 80DD of the Income Tax Act is applicable if a taxpayer pays an insurance premium to care for disabled dependent members. The deduction limits in Section 80DD and Section 80U are the same. Dependents in Section 80DD are defined as the siblings, parents, spouses and children of an assessee or a member of Hindu Undivided Families.
Section 80U provides deduction benefits to an individual having a disability and severe disability.
How does Section 80U Differ from Section 80DDB?
Under Section 80DDB, deductions are allowed on expenses incurred on the medical treatment of the dependent suffering from any diseases specified in the section. Section 80DDB doesn’t directly benefit the person suffering from the specified disease but the family member or kin who has incurred medical expense on the dependent’s treatment benefits.
Section 80U gives the direct benefit of tax deduction to the individual taxpayer with a disability.
Under Section 80DDB, deduction depends on seniority. A regular taxpayer who incurred expenses for treatment of their dependent with a specified disease will get a tax deduction of up to ₹40,000. If the taxpayer is a senior or super senior citizen, they can get removal of up to ₹1,00,000.
Drawbacks of Section 80U:
- The deduction allowed is minimal. So disabled individuals with high incomes may not benefit significantly from this section.
- A person who may not be disabled per the act’s provisions may claim a deduction by presenting a fake medical certificate.
- Disability covers the variety of disabilities caused by various illnesses, disorders, etc. At times, defining the disability is also a concern for a medical doctor.
Frequently Asked Questions
Is any proof required for Section 80U claims?
The person must only submit a medical certificate issued by an authorised person in Form 10-IA when filing an income tax return. No other proof is required.
Is it possible to claim deductions under both Sections 80DD and 80U?
Both Sections 80DD and 80U provide a deduction for disability. However, you cannot claim deductions for both sections simultaneously.
What is the maximum deduction available under Section 80U for severe disability?
The maximum deduction a person with a severe disability can get under Section 80U is ₹1.25 lakhs.
Is Section 80U applicable in the new tax regime?
The Budget 2020 launched a new tax regime under which individual and HUF taxpayers can pay income tax at a lower rate. This is applicable from 1st April 2020. Deduction under Section 80U continues even after introducing the new tax regime.
Is paralysis covered under Section 80U?
As per Circular No 246 (dated 20th September 1978), an assessee who has a permanent disability due to paralysis can claim tax deductions of ₹5,000.
What if my disability certificate has expired?
If your disability certificate has expired in the current year, you can still claim the deduction under section 80U. You must get your certificate reissued to claim the deduction in the subsequent years.
What is the form needed to claim a deduction under Sec 80u?
You must not submit any additional documents if you have the medical certificate. However, for some specific disabilities like autism and cerebral palsy, you need to fill out Form 10-IA additionally.
What is a severe disability under section 80u?
Severe disability under section 80U refers to the case where the person has a disability of 80% or more or has multiple disabilities, autism, and cerebral palsy.