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TAX SUPPORT FOR DISABLED & AILING!

Income-tax Act provides for Liberal Deductions in the

Computation of Taxable Income in such Special Cases

The Income-tax Act provides for special deductions in computing the taxable income of a taxpayer who is disabled or who is required to incur expenditure for the medical treatment, training or rehabilitation of a disabled dependent or any amount deposited for the maintenance of such disabled dependent.

Similarly deduction is also allowed to a taxpayer who is required to incur any expenditure for the medical treatment of specified diseases or ailments, either for himself or a dependent relative.

DEDUCTION FOR PERSONS WITH DISABILITY

Under the provisions of Section 80U of the Income-tax Act a Resident Individual suffering from a permanent physical disability (including blindness) or mental retardation, is allowed a deduction of Rs.50,000 in the computation of his Taxable Income.

A ‘person with disability’ means a person suffering from any disability over 40% (on the same lines as under the Disability Act) as certified by a medical authority. ‘Disability’ for the purposes Section 80U shall include blindness, low vision, leprosy cured, hearing impaired, locomotor disability, autism, cerebral palsy, multiple disability, mental retardation and mental illness as defined under the Disability Act, 1995.

Moreover, with effect from FY 2009-10, a higher deduction of Rs.1,00,000 (revised from the earlier Rs.75,000) has been provided in case of Persons with Severe Disability over 80%. For claiming this deduction the taxpayer is required to obtain a certificate issued by the Medical Authority under the Disability Act.

DEDUCTION FOR A DEPENDENT WITH DISABILITY

Section 80DD provides that if a resident individual or HUF has incurred any expenditure by way of medical treatment (including nursing), training or rehabilitation of a dependent, being a person with disability, or paid or deposited any amount under any approved scheme framed by the LIC or any insurer or UTI for the maintenance of such dependent, the individual or HUF, as the case may be, shall be allowed a deduction up to the maximum amount of Rs.50,000. Moreover, with effect from FY 2009-10, a higher deduction of Rs.1,00,000 (revised from the earlier Rs.75,000) has been provided in case of Persons with Severe Disability. The meaning of the term ‘disability’ and ‘severe disability’ shall be required to be understood as defined under the Disability Act, 1995 and as explained hereinabove with reference to Section 80U.

Keeping in view the reservations expressed by a large number of taxpayers that this provision may create difficulties, as it may lead to a situation where evidence for such expenses may be insisted upon by the Assessing Officer, Section 80DD was amended with effect from Assessment Year 2000-2001, to provide that the full deduction prescribed under this section shall be allowed, even if some expenditure is incurred or some amount is deposited under the approved schemes.

On the same lines as required under Section 80U, for claiming deduction under Section 80DD, the tax payer is required to obtain a certificate issued by the Medical Authority under the Disability Act.

DEDUCTION FOR SPECIFIED DISEASES

Section 80DDB provides for a deduction of upto Rs.40,000 in respect of any amount actually paid for the medical treatment of a specified disease or ailment, for himself or a dependent relative in case the taxpayer is an individual, or for any member of the HUF, in case the taxpayer is a HUF. This Section also provides that where such expenditure is incurred in respect of a Senior Citizen (being a person of the age 65 years or more), the deduction allowable shall be upto Rs.60,000.

It needs to be borne in mind that the deduction allowable under this section shall be the prescribed amount of Rs. 40,000/Rs.60,000 or the expenditure actually incurred, whichever is less.

Moreover, a proviso has also been inserted to the effect that the deduction available under this Section shall be reduced by the amount, if any, received from any insurance company in respect of a medical insurance policy taken for covering such medical treatment expenditure.

The specified diseases and ailments have been listed under Rule 11DD of the Income-tax Rules and these include Cancer, AIDS, Haemophilia, Thalassaemia, Chronic Renal failure and other Neurological diseases. A prescribed certificate in Form No.10-I must be obtained from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed, working in a Government hospital to support the claim for deduction.  For the above purpose ‘Government hospital’ includes a departmental dispensary whether full-time or part-time established and run by a department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants.

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