How disability deductions can boost your tax savings in India
What's the story
India's Income Tax Act provides significant financial relief to disabled individuals and their families through various deductions.
These deductions help alleviate financial strain, fostering a sense of security and well-being.
This article delves into the crucial sections that offer deductions for disability, empowering taxpayers to navigate and claim these benefits with confidence.
Eligibility criteria
Section 80U: Deduction for disabled individuals
Section 80U of the Income Tax Act provides a deduction for individuals with a disability.
The act classifies disabilities into two: disability, which has a deduction of ₹75,000 p.a., and severe disability, with a deduction of ₹1,25,000 p.a.
In order to claim this deduction, you need to have a disability certificate issued by a medical authority.
Supporting dependents
Section 80DD: Deduction for dependent disabilities
Taxpayers with a dependent with a disability (spouse, children, parents, or siblings) can claim deductions under Section 80DD.
Like Section 80U, it provides deductions of ₹75,000 for disability and ₹1,25,000 for severe disability.
It also stipulates that the dependent should not have claimed any deduction under Section 80U for themselves.
Healthcare costs
Medical treatment expenses
Besides direct deductions under Sections 80U and 80DD, the costs you incur on medical treatment, nursing, training, and rehabilitation of a disabled dependent are eligible for tax deductions under specific circumstances.
Such provisions are intended to provide financial relief by reducing the out-of-pocket expenses related to healthcare and rehabilitation services.
Financial security
Insurance policies for disability
Taxpayers can claim deductions under Section 80DDB for premiums paid on certain insurance policies specifically designed for people with disabilities.
These policies provide not only extensive coverage but also a financial safety net in times of emergencies or when additional support is needed, offering peace of mind and financial security.
Record-keeping
Documentation and proof
In order to successfully claim any of these deductions, it is important to maintain comprehensive documentation. This includes medical certificates indicating the percentage of disability, insurance policy documents, and receipts pertaining to medical expenses incurred due to disabilities.
Proper record-keeping is essential as it provides proof of your claim during income tax filing, ultimately facilitating a hassle-free process.