What is Section 80U? Tax Deduction for Disabled Individuals

Posted on: Jan 20, 2023 | 4 MIN | Written by: HDFC ERGO Team

What is Section 80U? Tax Deduction for Disabled Individuals

Many families in our country depend solely on one breadwinner. If unfortunately, this person meets with an accident and suffers from any disability, it will definitely impact his/her ability to earn. In this case, if the person has to also pay taxes just like everyone else, it may become a huge burden on him/her. That’s why under Section 80U of the Income Tax Act, an Indian resident who has suffered at least 40 per cent disability gets tax deductions. Let’s learn more about the definition of disability and how much a person can save in taxes.

What is Disability as per Section 80U?

The Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, defines the disabled as a person who has at least 40% disability certified by recognised medical authorities. Disability is categorised into 7 types:

1. Low vision:

A person with low vision has impaired eyesight which cannot be surgically corrected. However, such persons can still use their vision with the help of specific devices.

2. Blindness:

This refers to total loss of vision or lack of sight by 20 degrees of angle even after using corrective lenses.

3. Leprosy cured:

A person who has been cured of leprosy but has lost sensation in the hands, legs, eyelids, and other parts of the body, is also considered to be disabled. This is also applicable to those people, including senior citizens, who have severe deformities preventing them from doing any work.

4. Hearing impairment:

An individual who does not have hearing power of more than 60 decibels is said to have a hearing-impaired disability.

5. Loco motor disability:

This category refers to individuals with restricted mobility due to disability of bones, joints, and muscles.

6. Mental retardation:

Individuals who have subnormal levels of intelligence because of incomplete mental development fall under this category.

7. Mental illness:

People with any kind of mental disorder other than mental retardation come under this category.

Apart from the above categories, there’s another category called severe disability. Persons certified with 80% and more disability belong to this category.

Tax Deduction Under Section 80U

The amount of deduction under Section 80U falls under 2 categories:

• Those with 40% disability can claim INR 75,000 deduction

• Those with 80% or more disability can claim INR 1,25,000 deduction

To claim a deduction under Section 80U, the individual has to provide a medical certificate from a certified authority indicating the disability along with the return of income certificate of the given assessment year as per Section 139. If the certificate has expired, the disabled person can still claim a tax deduction in the expiry year. However, for subsequent years, they have to submit a fresh disability certificate. This certificate must be issued by a medical authority recognised by the government of India.

Difference Between Section 80DD and Section 80U

Section 80DD provides tax deductions to the family members or next of kin of a disabled person. In contrast, 80U provides tax deductions only to the person with a disability. Section 80DD is also applicable if the taxpayers are paying a premium for health insurance to look after the disabled person who is dependent on them. Dependents can be a person’s spouse, parents, children, or dependent siblings. The deduction limits are the same for both 80DD and 80U.

Documents Required to Claim Tax Benefits Under Section 80U of the Income Tax Act

To claim tax benefits under Section 80U of the Income Tax Act, you have to submit a disability certificate signed by a certified medical authority indicating the disability. The certificate must be in prescribed format, Form 10-IA. The form can be downloaded from the official website of Income Tax Department. You don’t have to submit any bills of the treatments received.

The medical authorities who can issue the certificate are:

• Chief Medical Officer (CMO) of a government hospital

• Neurologist holding an MD (Doctor of Medicine) in Neurology

• Civil surgeon in a government hospital

• Paediatric neurologist with an MD in Neurology

Conclusion

Tax deduction under Section 80U of the Income Tax Act can be claimed by a resident Indian who has a disability of at least 40% certified by an authorised medical authority. The person with a disability must submit a disability certificate to claim deductions. If your certificate has expired, you can still claim in the expiry year but for subsequent years, make sure the certificate is renewed. Along with a disability certificate, ensure your health insurance plan is renewed on time for uninterrupted coverage.

FAQs on Section 80U

1. Who is eligible for tax deduction under Section 80U?

Individuals with disabilities are eligible for claiming a tax deduction under Section 80U. Those with severe disability, i.e., 80% disability, can claim Rs 1,25,000 deduction and those with 40% disability can claim Rs 75,000 deduction.

2. Can NRIs get deduction under Section 80U?

No. Section 80U is meant only for resident Indians, NRIs are not eligible.

3. What is the maximum deduction limit under Section 80U?

For a person with 80% disability, the deduction limit is Rs 1,25,000. If the disability is 40%, the maximum deduction that you can claim is Rs 75,000.

4. Do I have to submit any documents for claiming tax benefits?

Yes, you have to submit a disability certificate that should be signed by a registered medical practitioner certifying your disability. The certificate format is 10-IA.

5. When should I claim the deduction under Section 80U?

Claim it while filing your income tax returns.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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