80DD, 80DDB and 80U - Taxation | Income Tax for assessment (Inter Level) PDF Download

Section 80DD. maintenance including normal medical treatment of a dependant who is person with disability

1. Who can claim deduction : A Resident Individual / Resident HUF who maintains disabled dependent person. The individual may be an Indian citizen or a foreign citizen. Resident means R-OR or R-NOR. Where the residential status of such individual or HUF is Non Resident in India then deduction u/s 80DD is not allowed.

2. Meaning of disabled dependent : A disabled dependent means a person who
(a) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them.
(b) in the case of a Hindu undivided family, a member of the Hindu undivided family,
(c) dependent wholly or mainly on such individual or Hindu undivided family for his support and maintenance,
(d) is not dependent on any person other than such Individual or HUF for his support or maintenance; and
(e) is suffering from permanent physical disability certified by a Medical Authority.

3. Amount of deduction : Deduction allowed is
(a) Rs. 75,000 fixed deduction is allowed irrespective of personal expenditure incurred.
(b) Rs. 1,25,000 fixed in case of person with severe disability.

4. Meaning of disability:

(i) blindness; (ii) low vision; (iii) leprosy-cured; (iv) hearing impairment; (v) locomotor disability; (vi) mental retardation; (vii) mental illness.

Person with disability: It means a person suffering from not less than 40% of any disability as certified by a medical authority. If the disability certified is less than 40% then, deduction unavailable. Person with severe disability: It means a person with 80% or more of one or more disabilities.
Note 1: The assessee should have incurred some expenditure for the medical treatment including nursing, training and rehabilitation of a disabled dependent, otherwise deduction is not available.
Note 2: The certificate of disability has to be furnished along with the ROI. Further this certificate has to be furnished every year in which this deduction is claimed.
Note 3: Double benefit of Section 80DD and 80U is not available.

P1: Discuss the allowability of deduction u/s 80DD of the following :
a. X has to pay to a hospital for treatment of a dependent (being a person with disability) Rs. 42,000 and spent nothing for life insurance or for maintenance of the dependent.
b. X has incurred for treatment Rs. 80,000 in the previous year for maintenance of (being a person with severe disability) dependents.
c. X, a Non-Resident has incurred Rs. 20,000 for treatment and Rs. 35,000 was deposited with LIC for maintenance of dependent (being a person with disability) [CA N 02]
Ans: Rs. 75,000; Rs. 1,25,000; nil
 

Section 80DDB. Medical treatment of specified disease of self or his dependents

1. Who can claim deduction : A Resident Individual / Resident HUF.
Such individual incurs expenditure on medical treatment of himself or his dependent family members who are suffering from specified disease. Where the taxpayer is a HUF then the expenditure should be incurred on the members of HUF.
The individual may be an Indian citizen or a foreign citizen. Resident means R-OR or R-NOR. Where the residential status of such individual or HUF is Non-Resident in India then deduction u/s 80DDB is not allowed.
Dependent family members have the same meaning as specified in section 80DD.

2. Amount of deduction : Deduction allowed is
(a) Rs. 40,000 or the actual expenditure incurred for specified disease whichever is less is allowed as deduction.
(b) In case of resident senior citizen (aged atleast 60 years) : Rs. 60,000 or the actual expenditure incurred for specified disease whichever is less is allowed as deduction.
(c) In case of resident very senior citizen (aged atleast 80 years) : Rs. 80,000 or the actual expenditure incurred for specified disease whichever is less is allowed as deduction.
Note 1 : Mediclaim insurance claim received shall be reduced from the amount of deduction allowed.
Note 2 : Assessee shall obtain a prescription from a specialist doctor for the purpose of availing this deduction. Govt. doctor not necessary.

3. Meaning of Specified disease: (i) Neurological diseases : (a) Dementia (b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease. (These diseases shall be treated as chronic and protracted, if the disability has been certified to be 40% and above).
(ii) Cancer (iii) Full Blown Acquired Immuno - Deficiency Syndrome (AIDS) (iv) Chronic Renal failure
(v) Hemophilia (vi) Thalassemia. (Need not be memorised).

P1 : (A) X, resident individual furnishes following information. Compute deductions allowed.
1. He incurs an expenditure of Rs. 2,000 for maintenance & medical treatment of disabled son aged 9 years.
2. He incurs an expenditure of Rs. 50,000 in respect of his Non-Resident father aged 67 years who is suffering from a notified disease.
(B) What is the amount of deduction u/s 80DDB if his father is resident in India and receives health insurance claim of Rs. 35,000.

Ans: 80DD 75,000 + 80DDB 40,000 = 90,000; 15,000. Hint : Deduction u/s 80DDB available is Rs. 60,000 only when person is a resident senior citizen.

Section 80U. Deduction to individual who is himself a disabled

1. Who can claim deduction : A resident individual who is completely blind or suffers from permanent physical disability certified by a Medical Authority.

2. Amount of deduction : Deduction allowed is
(a) Rs. 75,000 fixed deduction irrespective of expenditure incurred.
(b) Rs. 1,25,000 fixed in case of person with severe disability.

Note 1: Double benefit of Section 80DD and 80U is not available.

P1: Explain tax treatment: Mr. Nana and Mrs. Nana, a resident, both are suffering from hearing impairment (60% disability). Mrs. Nana is dependent on Mr. Nana and is suffering from cancer. Expenditure incurred for treatment of cancer is Rs. 40,000.

Ans: Deduction allowed Rs. 1,15,000.