Section 80U of the Income Tax: Tax Deduction for Disabled Individuals

Section 80U of the Income Tax: Tax Deduction for Disabled Individuals. Section 80U of the Income Tax Act offers significant relief to taxpayers who are certified as persons with disabilities. This provision allows such individuals to claim a fixed tax deduction from their gross total income, thereby reducing their overall tax liability. The objective of this section is to promote social welfare by providing financial support to disabled individuals. It encourages self-reliance by offering direct benefits to those who are medically certified as disabled.
What is Section 80U of the Income Tax?
Section 80U of the Income Tax Act, 1961 provides a tax deduction for individuals who are certified as suffering from a disability. The deduction is available only to resident individuals and aims to offer financial relief to people with disabilities by lowering their taxable income. This deduction is available only under the old tax regime.
The section defines a person with disability as someone having at least 40% of any specified disability, certified by a medical authority. A higher deduction is available for severe disabilities (80% or more). The benefit under this section is available irrespective of the actual expenses incurred on treatment or rehabilitation.
Who Can Claim Deduction Under Section 80U?
Only resident individuals who are certified by a recognized medical authority as persons with disabilities can claim deductions under Section 80U of the Income Tax Act. This means that the benefit is only available to Indian residents and not to Non-Resident Indians (NRIs). The individual must be suffering from at least 40% of the specified disability to be eligible for this deduction.
If the individual is suffering from a severe disability, which is defined as 80% or more, then a higher amount of deduction is permitted. The certification should be from an authorised medical authority and submitted as per the rules mentioned under Form 10-IA.
Which Disabilities Are Covered Under Section 80U of the Income Tax?
The disabilities covered under Section 80U are specifically mentioned in the Income Tax Act. These include:

Blindness: Complete absence of sight or visual acuity less than 6/60 in the better eye even after correction.

Low Vision: Impairment of visual functioning even after treatment or standard refractive correction, but capable of using vision through assistive devices.

Leprosy Cured: Individuals cured of leprosy but who suffer from loss of sensation or deformities in hands or feet.

Hearing Impairment: Loss of 60 decibels or more in the better ear in conversational range.

Locomotor Disability: Disability of the bones, joints, or muscles leading to substantial restriction of movement.

Mental Retardation: A condition of incomplete or arrested mental development resulting in subnormal intelligence.

Mental Illness: Any other mental disorder.

Under severe disability, the Act includes multiple disabilities, cerebral palsy, and autism. These are considered conditions where the disability level is 80% or more.
Tax Deduction for Disabled Individuals: Quantum of Deduction
Section 80U provides a fixed deduction amount from the gross total income. The deduction is not linked to the amount of money spent on medical treatment or rehabilitation.

A person with at least 40% disability is eligible for a deduction of Rs. 75,000.

A person with a severe disability (80% or more) is eligible for a deduction of Rs. 1,25,000.

This flat deduction helps disabled individuals reduce their taxable income and, thereby, their tax burden. It is important to note that the deduction remains fixed regardless of income level or actual expenses incurred.
Eligibility Requirements to Claim Deductions Under Section 80U
To claim the deduction under Section 80U, certain eligibility criteria must be met:

The taxpayer must be a resident individual.

The taxpayer must have a medical certificate issued by a certified medical authority.

The certificate must be in Form 10-IA.

The disability should be at least 40%.

There is no requirement to submit medical bills or receipts for expenses incurred. Only the disability certificate is needed to claim the deduction.
If the certificate is temporary and has an expiry date, the deduction can still be claimed for the financial year in which it expires. However, a fresh certificate will be needed for subsequent years.
How to Claim Deduction Under Section 80U?
The deduction under Section 80U is claimed at the time of filing the Income Tax Return. Here are the steps:

Obtain the disability certificate in Form 10-IA from an authorised medical authority.

Retain the certificate for your records; you do not need to submit it with the return.

While filing your return under the old tax regime, mention the deduction amount in the relevant section.

Keep medical records, if any, safe for future reference in case the tax department asks for proof.

This deduction is a straightforward way to reduce taxable income without the need to maintain extensive documentation.
Medical Authorities Authorised to Issue Disability Certificate
The following medical professionals are authorised to issue a certificate for the purpose of claiming deduction under Section 80U:

A neurologist with an MD in Neurology

A pediatric neurologist with MD in Neurology for disabled children

A civil surgeon in a government hospital

The Chief Medical Officer (CMO) in a government hospital

These authorities are empowered to assess the degree of disability and issue the certificate in the prescribed format.
Form 10-IA
Form 10-IA is the official form that must be filled and certified by the authorised medical authority. It should mention:

Type of disability

Percentage of disability

Duration (permanent or temporary)

Details of the medical authority

The form acts as the primary evidence of the taxpayer’s eligibility for the deduction.
Validity of Disability Certificate
If the certificate is for a permanent disability, it can be used for multiple years. However, if it has an expiry date, then:

The deduction can be claimed in the financial year in which the certificate is valid.

A fresh certificate will be required from the next financial year onwards.

This ensures that only eligible individuals continue to claim the deduction under Section 80U.
Example of Tax Calculation Using Section 80U
Let’s consider a taxpayer with a gross total income of Rs. 10,00,000 and a certified disability of 60%.

Deduction under Section 80U = Rs. 75,000

Net taxable income = Rs. 10,00,000 - Rs. 75,000 = Rs. 9,25,000

Tax liability will now be calculated on Rs. 9,25,000 instead of Rs. 10,00,000, resulting in considerable tax savings.
Difference Between Section 80U and Section 80DD
While both sections provide deductions for disability, their scope is different:

Section 80U: Deduction for the taxpayer’s own disability.

Section 80DD: Deduction for expenses incurred on medical treatment and rehabilitation of a dependent family member with disability.

Dependents under Section 80DD include spouse, children, parents, siblings, and members of a Hindu Undivided Family (HUF).
It is important to note that both deductions cannot be claimed for the same person. If an individual claims deduction under Section 80DD for a dependent, then that dependent cannot claim deduction under Section 80U for the same disability.
Difference Between Section 80U and Section 80DDB
Section 80DDB provides deductions for medical treatment expenses for specific diseases, either for self or for dependent family members.

Section 80U: Deduction is based on the degree of disability.

Section 80DDB: Deduction is based on actual expenditure for treatment of specified diseases like cancer, Parkinson’s, etc.

Each section serves a different purpose and should be claimed appropriately based on the taxpayer’s situation.
Section 80U Deduction and the New Tax Regime
Under the new tax regime, taxpayers cannot claim deductions under Section 80U. The benefit is only available to those who opt for the old tax regime. Therefore, individuals must assess which regime is more beneficial for them based on their total income and available deductions.
Conclusion
Section 80U of the Income Tax offers essential financial relief to disabled individuals. It simplifies the process by offering a flat deduction and does not require submission of expenditure proof. However, a valid medical certificate is mandatory. Taxpayers should ensure they have the certificate in the prescribed format and from the authorised authority.
Compliance Calendar LLP can assist individuals in planning and filing their taxes efficiently. With professional tax guidance, individuals can ensure that they claim all eligible deductions and file accurate returns. This not only reduces tax burden but also ensures compliance with the Income Tax Act.
If you are a person with disability or have any queries related to your tax deductions, consult with the experts at Compliance Calendar LLP for a smooth and stress-free tax filing experience.
Email: info@ccoffice.in
Call/Whatsapp: +91 9988424211
FAQs
Q1. Who is eligible to claim tax deduction under Section 80U of the Income Tax Act?
Ans. Only a resident individual who is certified as a person with at least 40% disability by a recognized medical authority is eligible to claim the deduction under Section 80U. Non-resident individuals (NRIs) are not eligible.
Q2. What is the amount of deduction allowed under Section 80U?
Ans. A fixed deduction of Rs.75,000 is allowed for individuals with at least 40% disability, and Rs.1,25,000 is allowed for individuals with severe disability (80% or more), irrespective of actual medical expenses.
Q3. Is it mandatory to submit medical bills or treatment proof to claim this deduction?
Ans. No, there is no requirement to submit any medical bills or expense proofs. You only need a valid disability certificate in Form 10-IA issued by a recognized medical authority.
Q4. Can a person claim both Section 80U and Section 80DD deductions in the same year?
Ans. No. A person cannot claim both for the same disability. Section 80U is for self-disability, while Section 80DD is for expenses incurred on a dependent family member with disability.
Q5. Who can issue the disability certificate required under Section 80U?
Ans. The certificate must be issued by a government hospital authority such as a civil surgeon, Chief Medical Officer (CMO), or a neurologist (or pediatric neurologist in case of children) with an MD in Neurology.
Q6. Is the deduction under Section 80U available under the new tax regime?
Ans. No. The deduction under Section 80U can only be claimed if the taxpayer opts for the old tax regime. It is not available under the new regime introduced in FY 2020-21.
Q7. What happens if the validity of the disability certificate expires during the financial year?
Ans. If the certificate expires during the financial year, the deduction can still be claimed for that year. A new certificate will be required from the next financial year onwards.
Q8. What types of disabilities are covered under Section 80U of the Income Tax?
Ans. The section covers disabilities such as blindness, low vision, leprosy cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism, and cerebral palsy.

Section 80U of the Income Tax Act offers significant relief to taxpayers who are certified as persons with disabilities. This provision allows such individuals to claim a fixed tax deduction from their gross total income, thereby reducing their overall tax liability. The objective of this section is to promote social welfare by providing financial support to disabled individuals. It encourages self-reliance by offering direct benefits to those who are medically certified as disabled.

What is Section 80U of the Income Tax?

Section 80U of the Income Tax Act, 1961 provides a tax deduction for individuals who are certified as suffering from a disability. The deduction is available only to resident individuals and aims to offer financial relief to people with disabilities by lowering their taxable income. This deduction is available only under the old tax regime.

The section defines a person with disability as someone having at least 40% of any specified disability, certified by a medical authority. A higher deduction is available for severe disabilities (80% or more). The benefit under this section is available irrespective of the actual expenses incurred on treatment or rehabilitation.

Who Can Claim Deduction Under Section 80U?

Only resident individuals who are certified by a recognized medical authority as persons with disabilities can claim deductions under Section 80U of the Income Tax Act. This means that the benefit is only available to Indian residents and not to Non-Resident Indians (NRIs). The individual must be suffering from at least 40% of the specified disability to be eligible for this deduction.

If the individual is suffering from a severe disability, which is defined as 80% or more, then a higher amount of deduction is permitted. The certification should be from an authorised medical authority and submitted as per the rules mentioned under Form 10-IA.

Which Disabilities Are Covered Under Section 80U of the Income Tax?

The disabilities covered under Section 80U are specifically mentioned in the Income Tax Act. These include:

Blindness: Complete absence of sight or visual acuity less than 6/60 in the better eye even after correction.
Low Vision: Impairment of visual functioning even after treatment or standard refractive correction, but capable of using vision through assistive devices.
Leprosy Cured: Individuals cured of leprosy but who suffer from loss of sensation or deformities in hands or feet.
Hearing Impairment: Loss of 60 decibels or more in the better ear in conversational range.
Locomotor Disability: Disability of the bones, joints, or muscles leading to substantial restriction of movement.
Mental Retardation: A condition of incomplete or arrested mental development resulting in subnormal intelligence.
Mental Illness: Any other mental disorder.

Under severe disability, the Act includes multiple disabilities, cerebral palsy, and autism. These are considered conditions where the disability level is 80% or more.

Tax Deduction for Disabled Individuals: Quantum of Deduction

Section 80U provides a fixed deduction amount from the gross total income. The deduction is not linked to the amount of money spent on medical treatment or rehabilitation.

A person with at least 40% disability is eligible for a deduction of Rs. 75,000.
A person with a severe disability (80% or more) is eligible for a deduction of Rs. 1,25,000.

Eligibility Requirements to Claim Deductions Under Section 80U

To claim the deduction under Section 80U, certain eligibility criteria must be met:

The taxpayer must be a resident individual.
The taxpayer must have a medical certificate issued by a certified medical authority.
The certificate must be in Form 10-IA.
The disability should be at least 40%.

There is no requirement to submit medical bills or receipts for expenses incurred. Only the disability certificate is needed to claim the deduction.

If the certificate is temporary and has an expiry date, the deduction can still be claimed for the financial year in which it expires. However, a fresh certificate will be needed for subsequent years.

How to Claim Deduction Under Section 80U?

The deduction under Section 80U is claimed at the time of filing the Income Tax Return. Here are the steps:

Obtain the disability certificate in Form 10-IA from an authorised medical authority.
Retain the certificate for your records; you do not need to submit it with the return.
While filing your return under the old tax regime, mention the deduction amount in the relevant section.
Keep medical records, if any, safe for future reference in case the tax department asks for proof.

This deduction is a straightforward way to reduce taxable income without the need to maintain extensive documentation.

Medical Authorities Authorised to Issue Disability Certificate

The following medical professionals are authorised to issue a certificate for the purpose of claiming deduction under Section 80U:

A neurologist with an MD in Neurology
A pediatric neurologist with MD in Neurology for disabled children
A civil surgeon in a government hospital
The Chief Medical Officer (CMO) in a government hospital

These authorities are empowered to assess the degree of disability and issue the certificate in the prescribed format.

Form 10-IA

Form 10-IA is the official form that must be filled and certified by the authorised medical authority. It should mention:

Type of disability
Percentage of disability
Duration (permanent or temporary)
Details of the medical authority

The form acts as the primary evidence of the taxpayer’s eligibility for the deduction.

Validity of Disability Certificate

If the certificate is for a permanent disability, it can be used for multiple years. However, if it has an expiry date, then:

The deduction can be claimed in the financial year in which the certificate is valid.
A fresh certificate will be required from the next financial year onwards.

This ensures that only eligible individuals continue to claim the deduction under Section 80U.

Example of Tax Calculation Using Section 80U

Let’s consider a taxpayer with a gross total income of Rs. 10,00,000 and a certified disability of 60%.

Deduction under Section 80U = Rs. 75,000
Net taxable income = Rs. 10,00,000 - Rs. 75,000 = Rs. 9,25,000

Tax liability will now be calculated on Rs. 9,25,000 instead of Rs. 10,00,000, resulting in considerable tax savings.

Difference Between Section 80U and Section 80DD

While both sections provide deductions for disability, their scope is different:

Section 80U: Deduction for the taxpayer’s own disability.
Section 80DD: Deduction for expenses incurred on medical treatment and rehabilitation of a dependent family member with disability.

Dependents under Section 80DD include spouse, children, parents, siblings, and members of a Hindu Undivided Family (HUF).

It is important to note that both deductions cannot be claimed for the same person. If an individual claims deduction under Section 80DD for a dependent, then that dependent cannot claim deduction under Section 80U for the same disability.

Difference Between Section 80U and Section 80DDB

Section 80DDB provides deductions for medical treatment expenses for specific diseases, either for self or for dependent family members.

Section 80U: Deduction is based on the degree of disability.
Section 80DDB: Deduction is based on actual expenditure for treatment of specified diseases like cancer, Parkinson’s, etc.

Each section serves a different purpose and should be claimed appropriately based on the taxpayer’s situation.

Section 80U Deduction and the New Tax Regime

Under the new tax regime, taxpayers cannot claim deductions under Section 80U. The benefit is only available to those who opt for the old tax regime. Therefore, individuals must assess which regime is more beneficial for them based on their total income and available deductions.

Conclusion

Section 80U of the Income Tax offers essential financial relief to disabled individuals. It simplifies the process by offering a flat deduction and does not require submission of expenditure proof. However, a valid medical certificate is mandatory. Taxpayers should ensure they have the certificate in the prescribed format and from the authorised authority.

Compliance Calendar LLP can assist individuals in planning and filing their taxes efficiently. With professional tax guidance, individuals can ensure that they claim all eligible deductions and file accurate returns. This not only reduces tax burden but also ensures compliance with the Income Tax Act.

If you are a person with disability or have any queries related to your tax deductions, consult with the experts at Compliance Calendar LLP for a smooth and stress-free tax filing experience.

Email: info@ccoffice.in

Call/Whatsapp: +91 9988424211

FAQs

Q1. Who is eligible to claim tax deduction under Section 80U of the Income Tax Act?

Ans. Only a resident individual who is certified as a person with at least 40% disability by a recognized medical authority is eligible to claim the deduction under Section 80U. Non-resident individuals (NRIs) are not eligible.

Q2. What is the amount of deduction allowed under Section 80U?

Ans. A fixed deduction of Rs.75,000 is allowed for individuals with at least 40% disability, and Rs.1,25,000 is allowed for individuals with severe disability (80% or more), irrespective of actual medical expenses.

Q3. Is it mandatory to submit medical bills or treatment proof to claim this deduction?

Ans. No, there is no requirement to submit any medical bills or expense proofs. You only need a valid disability certificate in Form 10-IA issued by a recognized medical authority.

Q4. Can a person claim both Section 80U and Section 80DD deductions in the same year?

Ans. No. A person cannot claim both for the same disability. Section 80U is for self-disability, while Section 80DD is for expenses incurred on a dependent family member with disability.

Q5. Who can issue the disability certificate required under Section 80U?

Ans. The certificate must be issued by a government hospital authority such as a civil surgeon, Chief Medical Officer (CMO), or a neurologist (or pediatric neurologist in case of children) with an MD in Neurology.

Q6. Is the deduction under Section 80U available under the new tax regime?

Ans. No. The deduction under Section 80U can only be claimed if the taxpayer opts for the old tax regime. It is not available under the new regime introduced in FY 2020-21.

Q7. What happens if the validity of the disability certificate expires during the financial year?

Ans. If the certificate expires during the financial year, the deduction can still be claimed for that year. A new certificate will be required from the next financial year onwards.

Q8. What types of disabilities are covered under Section 80U of the Income Tax?

Ans. The section covers disabilities such as blindness, low vision, leprosy cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism, and cerebral palsy.