Income Tax Deduction Under Section 80u
- Author :
- TATA AIG Team
- Published on :
- 2 min read
The government provides several tax deductions and schemes to individuals to save more income and benefit themselves. Among these, there are certain tax benefits, like the 80U tax benefit, which are specially designed for taxpayers with disability.
These tax deductions have several benefits and can provide you with a significant amount of tax relaxation so that you are not burdened with taxes in addition to your medical expenses.
With section 80U and any medical insurance, you can cover a lot of your maintenance and medical expenses. Want to know more about the 80U deduction and how you can claim it? Here in this blog you will find all the details.
What is Section 80U Income Tax?
Under the Income Tax Act of 1961, there is a Section 80U, which states that while computing the income tax of any individual who is also a resident-certified by the medical authority with a particular disability at any time during the previous year shall be allowed a tax deduction or tax benefit.
The sum amount varies as per the degree of disability, about which you will get to know in further sections.
Tax Deductions and Exemptions Under the New Tax Regime
Benefits of Filing Income Tax Returns (ITR)
Why is 80U Deduction Given Under Income Tax?
As you know, the 80U tax benefit is given only to individuals with disabilities. It is done so because they have medical and other expenses because of their disability, which take up a significant amount of their income.
In such cases, if the government levies average tax amounts on their income, it will cause financial hardship for them. Thus, to provide them some relief, the 80U tax benefit was introduced under the Income Tax Act 1961.
What are the Categories of Disabilities Under 80u Income Tax?
The government has divided the categories of disabilities under the Persons with Disability Act of 1995. People suffering from such disabilities are allowed to avail the benefits of Section 80U Income Tax.
Low Vision: Under this category, the affected person has impaired eyesight, and it cannot be treated surgically. They have to use different pieces of eye equipment to be able to use their vision.
Blindness: Blindness is defined as the complete loss of vision or vision limitation of 20 degrees or more or visual acuteness of less than 6160 after the usage of corrective lenses.
Leprosy Cured: Individuals who are leprosy patients and have been cured but still suffer from paresis in the legs, foot, eyelid, hands or other extremities are included in it. Additionally, it also includes older citizens who have severe physical deformities/disabilities that prevent them from performing any helpful activities.
Cerebral Palsy: This is a movement disorder and can appear to show symptoms in early childhood. The individuals suffering from CP feel stiffness in muscles, tremors and weak muscles; in addition to it, they may also face vision, hearing and speaking difficulties.
Locomotor Disability: Individuals who have locomotor disability have limited movement in their bones, joints and muscles.
Mental Retardation: Mentally retarded individuals have incomplete or partial growth of their mental abilities, which leaves them on a more subordinate intelligence level.
Autism: It is another brain development disability that impacts the affected person's ability to interact and socialise with people, thus making them unable to integrate and communicate in society.
Mental Illness: This includes other mental disorders.
Hearing Impairment: It includes individuals with hearing loss of at least 60 decibels.
What is 80U Deduction Limit
Now that you know what disabilities are included under the 80U tax benefit, you need to know the deduction limits set by the government.
The government has defined the mentioned disabilities as severe disabilities and disabilities, and they both have their separate deduction limits.
For Person with Disability: In case a person is suffering from at least 40% disability, then they are eligible for a claim for 80U tax benefit of up to ₹75,000 on their taxable income.
For a Person with Severe Disability: In case a person is suffering from 80% disability or has multiple ailments from one or multiple disabilities. Then, they claim an 80U tax benefit of up to ₹ 1,25,000.
Requirements to Avail 80U Tax Benefit
80U tax benefit is given to individuals with disabilities; however, to avail of these benefits, the person needs to meet certain requirements. These include:
The person needs to submit a medical certificate prepared by a recognised medical authority certifying their disability. Remember, the certificate should be prepared according to the prescribed format contained in Form 10-IA.
The certificate issued must contain the details of disabilities that affected the taxpayer.
The issued medical certificate must be submitted with the income tax returns filed by the taxpayer. Moreover, the tax should be filed according to the provisions of the Income Tax Act.
As the medical certificate issued has specified validity, and if that validity expires in the current financial year, the taxpayer is still eligible to get the 80U tax benefit. However, they need to get a new certificate to avail of benefits in the next tax year.
There is no requirement to submit proof of expenses and medical rehabilitation by the taxpayer. Because the 80U deduction limit amount is authorised at the flat rates irrespective of the cost incurred.
Who Can Issue Certificates Under 80U Income Tax
Certain authorised medical personnel and authorities are legalised to issue the certificate of disability.
Only the certificate issued by these medical authorities will be legally accepted by the Income Tax Department for allowing the 80U tax benefit. These authorities include:
A Civil Surgeon in a Government Hospital
A Neurologist with a Degree of Doctor of Medicine (MD) in Neurology
A Chief Medical Officer in a Government Hospital
A Paediatric Neurologist with a Degree of Doctor of Medicine (MD) in Neurology in case the patient is a child/minor.
Difference Between Section 80U and 80DD
Sections 80U and 80DD both are made for tax benefits to disabled persons. However, there is a prime distinction between the two, which people often need clarification with.
The Section 80U provided deduction benefits on the taxable income to the disabled taxpayer. However, in Section 80DD, the tax benefit is provided to the taxpayer who has a dependent with a disability.
There are other differences, too, that are explained in this table:
|Taxpayers who are suffering from disabilities.
|A taxpayer with a disabled dependent in the family or relation.
|The taxpayer must have a disability of at least 40%.
|The disabled person who is dependent on the taxpayer must have at least 40% disability.
|Expenses of the taxpayers themselves should be medical expenses and maintenance expenses.
|Expenses allowed for deductions include medical expenses, maintenance expenses and educational expenses.
|Documents for Deductions
|Taxpayers must have the certificate issued by a recognised authority in Form 10IA.
|Certificate issued by recognised medical authority in Form 10IA.
|For Person with Disability: ₹75,000
|For Person with Disability: ₹75,000
|For a Person with Severe Disability: ₹1,25,000
|For a Person with Severe Disability: ₹1,25,000
Importance of Health Insurance Plan
It is an undeniable fact that in today’s time, having medical insurance is crucial for every person. If you are someone or have someone in relation suffering from a disability, then it becomes even more crucial.
Having a health insurance plan works in your favour by covering a significant amount of cost that you might have to bear for medical and maintenance expenses of the disability.
Tata AIG health insurance policy has excellent benefits like OPD cover, consumable cover, coverage for pre-existing illnesses, and more.
Moreover, you can enjoy cashless health insurance along with tax benefits with our customisable health plans. Explore our websites for a health insurance plan of your choice today!
Section 80U is a beneficial act for people with disabilities, and it provides them relief with a lot of financial assistance. Claiming the 80U tax benefit is a pretty straightforward method; you need to have the proper documents to fulfil all the requirements for availing of the benefit.
What is the 80U 80C exemption?
Income tax deductions under section 80C to 80U include several tax benefits provided to individuals and businesspeople for saving tax on their taxable income. It includes a wide array of expenses, investments, property purchases, etc.
Do persons with disabilities get exemptions on property tax?
Yes, there is a rule of disability exemption property tax for people with disabilities. It allows them to pay less or no property tax on the purchase of new property.
Can I claim Section 80U and 80DD tax benefits together?
No, you cannot claim tax benefits for both sections for the same person.
Do any investments come under section 80U?
No, the disabled taxpayer does not explicitly have to make any investment to claim the 80U deduction. Under the Income Tax Act 1961, any disabled taxpayer can claim the benefits by just providing their medical certificate.
Disclaimer / TnC
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