Section 80U of Income Tax Act

  • Author :
  • TATA AIG Team
  • Published on :
  • 02/01/2024

Within Chapter VI A, the Income Tax Act outlines various deductions eligible for taxpayers. These deductions play a critical role in minimising tax liability. Section 80U of the Income Tax Act of 1961 outlines tax benefits intended for individual taxpayers with disabilities.

Specific deductions pertain to certain expenditures and are encouraged by the Indian government through tax relief measures, such as those listed under 80C.

Additionally, deductions are available based on specific conditions being fulfilled, which aim to alleviate the tax burden. One such significant deduction falls under section 80U. This disability exemption in income tax directly reduces your gross income. Let us look into the specifics of this section and understand the deductions it offers.

What Does Section 80U Provide?

Section 80U provides a flat rate of the amount to be deducted from the gross taxable income of the disabled individual. According to this legislation, Indian residents with a disability exceeding 40% are recognised as persons with disability and 80% as having a severe disability. This is introduced to encourage disabled individuals to earn by providing them with tax benefits.

Eligibility for Taking Section 80U Deduction

Indian residents, certified as disabled by medical authorities as persons with disabilities at any point in the specified financial year, can claim this income tax disability deduction for themselves.

This deduction's entitlement is contingent upon a citizen's residential status. Non-resident Indians are not eligible to avail of these tax deductions.

Limit of Deduction Under Section 80U

While section 80U of the Income Tax Act offers taxable deductions, there is a limit to the relief it provides to citizens.

The maximum income tax exemption for disabled persons allowed is specified which ensures a balance between assistance and tax benefits. Let us take a look at the 80U deduction limit:

Disabilities Covered in Section 80U

A “person with general disability” refers to an individual whose disability amounts to at least 40 per cent, as validated by the medical authorities. Disability within this context encompasses these conditions:

Blindness: It constitutes a total absence of sight or limitations in the field of vision measuring at an angle of 20 degrees or worse.

Low vision pertains to individuals with visual impairment functions that remain uncorrectable through surgery or standard refractive measures.

Hearing impairment: It signifies a loss of hearing ability of at least 80 decibels.

Leprosy (cured): It refers to individuals who have been treated for leprosy but still experience lingering disabilities such as loss of sensation in the hands or feet and paralysis in eyelids and eyes.

Locomotor disability denotes impairments that affect joints, muscles, or bones, severely restricting limb movements.

Mental retardation: It characterises individuals experiencing incomplete or arrested cognitive development. It results in below-average intelligence levels.

Mental illness: It encompasses various other mental disorders.

On the other hand, a “person with a grave disability” is characterised by a condition where the disability of that person reaches 80 per cent or higher.

Cerebral palsy: It involves a cluster of movement disorders emerging in early childhood in individuals.

Autism: It falls under spectrum disorders which affect the brain development of individuals. It often influences an individual’s social perception and interaction.

Example of Taking Section 80U Deduction

If the individual's combined income amounts to ₹12,00,000 and they experience 50% disability, they are eligible for an income tax rebate for physically handicapped 80U deduction of ₹75,000.

This handicap deduction in income tax would consequently lower their overall income to ₹11,25,000. This reduces the overall tax liability of the individual.

Conclusion

Tax deductions often lessen one's financial burden. Specific deductions related to expenses can be perceived as incentives encouraged by India's government. It offers tax relief on investments like those covered under 80C and others.

Conversely, different deductions are granted by the government for citizens who have specific medical conditions to alleviate their tax obligations. Section 80U stands as an example of such deductions.

Individuals with disabilities should understand these deduction provisions outlined in section 80U and leverage these opportunities to claim tax benefits.

Tax Benefits Under Section 80D with Tata AIG

While considering the Income Tax Act, Section 80D mainly focuses on the deductions allowed on premiums paid by the assessee on health insurance policy.

₹50,000 per year for senior citizens and ₹25,000 for other individuals, or the amount spent, whichever is lower, can be deducted from gross total income before tax calculation.

With tax benefits on medical insurance policies, one can safeguard one’s health while availing tax benefits. At Tata AIG, we provide health insurance plans at a very affordable cost with add-on facilities as per your requirements. You can also check insurance premiums using the health insurance calculator on our website.

Remember to keep the documents for tax benefits when you buy health insurance online.

Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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