All individuals who are taxable under the Income Tax Law have to pay taxes and file Income Tax Returns every fiscal year. The taxation structure is revised by the central government on yearly basis that makes people eligible to pay taxes as per the tax bracket they fall into. The government has also made provisions for all taxpayers to save their hard earned money from being taxed through various deductions of their taxable income under a number of sections such as section 80C, section 80D, section 80U, etc.
One of the provisions for disabled taxpayers to reduce their taxable income is section 80U. Under this section of the Income Tax Act, 1961, those taxpayers who suffer from applicable disability are entitled to save on their taxable income of up to a maximum of Rs 1.25 Lakhs. This provision, however, is applicable only for Indian citizens. Persons with lower disability are entitled to lower deduction limits whereas persons with higher or complete disability are eligible for higher deduction limits.
A taxpayer who has any of the disabilities is eligible for deductions under section 80U of the Income Tax Act, 1961. Let us delve deep into the eligibility criteria, allowed deduction limits and certification for disability.
The taxpayer qualifies for claiming deductions under these situations if he fulfils the following criteria:
- He is a person with disability.
- He is an Indian resident.
- He is certified to be a person with disability by the medical authority during the previous year.
- He submits the certificate issued by the medical authority in the prescribed format containing the return of income for the taxable year.
Persons with disability are categorised in two categories to claim deductions under section 80U. The deduction limit of both categories of taxpayers is different:
- Person with Disability – If the disability level of a person is more than 40%, he is called a person with disability. The person with disability is liable to claim deductions of Rs 75,000 as per the budget of 2015-16.
- Person with Severe Disability – If a person loses more than 80% of his capability to perform a task, then he is considered to be a person with severe disability. A taxpayer with severe disability is eligible for deductions of Rs 1,25,000 from his taxable income.
In order to claim benefits under section 80U, the eligible taxpayer should do the following:
- Furnish a copy of the medical certificate issued by the compliant authority in the format prescribed by the government.
- Submit return of income under section 139 for the year for which the deduction is claimed.
- In case of reassessment, fresh certificate should be furnished by the medical authority.
- The certificate should be obtained after the expiry of the period mentioned in the original certificate.
The criteria of disability for claiming the deduction of taxable income is fixed by the government. In this case, the disability is considered as per “The Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995” under which a person suffering from any of the below mentioned disabilities becomes eligible for claiming tax deductions under section 80U:
- Low vision – A person with low vision signifies that he remains to be visually impaired even after going through the treatment or standard refractive correction but he still is potentially capable to perform his tasks with the aid of vision assisting devices.
Blindness – A person is said to be blind if he fulfils any of the criteria:
- Total absence of sight.
- Visual acuity of less than 6160 or 201200 (snellen) in the eye of higher vision with the help of corrective lens.
Less than 20 degrees of field of vision.
- Hearing impairment – Hearing impairment is considered when the person is not able to hear sixty decibels or more in the conversational range of frequencies in the better ear.
Leprosy-cured – A person is considered eligible for this disability if he has been cured of leprosy but is still suffering from:
- Loss of sense in hands or feet.
- Loss of sensation and paresis in eyes but with no deformity.
- Deformity and paresis in hands and feet but having enough mobility to perform normal activities.
Extreme physical deformity that prevents a person from engaging in an occupation to earn his living.
- Mental illness – A person is called mentally ill if he has any mental disease apart from mental retardation.
- Mental retardation – Mental retardation is a condition where the development of the mind of the person is either arrested or incomplete that results in sub-normality of intelligence.
- Loco-motor disability – Loco-motor disability is the disability of bones or joint muscles that leads to significant limitation of the movement of limbs.
- Autism – Restricted use of mind for social interaction, verbal and non-verbal communication, unique differences, etc.
- Cerebral palsy – A person suffering from cerebral palsy is not able to move some or the other part of his body permanently due to the disability in his mind.
Person with disability means that the person cannot use 40% or more of his ability to perform a task. A person with severe disability means that the person has lost 80% or more of his ability to perform a specific task. A person who has lost 100% of his ability to perform a specific task also qualifies for deductions under this section.
- An eligible taxpayer should produce the medical certificate issued by the concerned authority that certifies the disability range.
- For disability such as cerebral palsy or autism, the taxpayer needs to fill Form 10-IA.
- The medical authority has to certify the disability for claiming income tax benefits under section 80U.
Section 80U and section 80DDB provide tax benefits to persons with disabilities and their family members. A person suffering from a disability is eligible to claim tax deductions under section 80U whereas those taxpayers whose dependent family member is suffering from a disability can claim tax benefits under section 80DDB.
As per section 80DDB, the taxpayer can claim tax benefits for medical expenses incurred on the treatment of the dependent disabled. This benefit can be claimed by both individuals and HUFs. However, it is compulsory for both the taxpayer and the dependent to be resident of India for the given financial year.