Understanding Section 80U: Tax Deduction for a Person With Disabilities

Several sections of the Income Tax Act of 1961 provide relief to individuals in terms of payable tax if they or any of their family members suffer from specific disabilities. 

One of them is Section 80U of the Income Tax Act, which directly allows tax deductions for individuals with disabilities. This allows for a tax deduction between ₹75,000 and ₹1.25 lakh, depending on the disability percentage.

In this blog, you can learn about the different vital aspects of Section 80U and the procedure to claim its listed benefits. 

Quick Overview

• Disability percentage must be between 40% and 80% to claim ₹75,000 and over 80% to claim ₹1.25 lakh.
• Resident Indians with a disability certified by an authorised medical establishment are eligible for this deduction. 
• Section 80U and 80DDB are separate deductions and cannot be claimed together for the same person.

What is Section 80U Deduction?

Deduction under Section 80U enlists the grounds for income tax relaxation for individual taxpayers who suffer from a disability. According to the law, a person having more than 40% disability can be held eligible for the associated benefits. 

Let’s consider a scenario where an individual has a gross total income of ₹12 lakh and is eligible for a deduction due to having 40% disability.

We will now compare the tax liability both with and without the Section 80U deduction to see how much tax this individual saves. 

Here, the individual reduces their taxable income from ₹12 lakh to ₹11.5 lakh. As a result, the tax payable after cess is reduced by ₹15,600.

Note that another similar deduction is allowed by the Income Tax Department u/s 80DD. Nonetheless, this relief is extended when any one of the taxpayer’s dependent family members is found to be disabled. 

Section 80U Tax Benefit Eligibility

Here is a detailed breakdown of people with disability, meeting the parameters to claim deductions under Section 80U

• Any resident Indian who has been certified as a person with disability by an authorised medical establishment during any time of the concerned assessment year can claim a tax deduction under Section 80U. 
• However, it is essential to keep in mind that deductions u/s 80U can be requested by an individual only for themselves. 
• Moreover, a person's residential address plays a vital role in determining their eligibility. NRIs cannot claim income tax deductions through Section 80U. 
• Lastly, if the medical authority certifies that the concerned person’s disability varies between 40%-80%, then only they can claim tax deductions. 

Disabilities Covered Under Section 80U

The 80U income tax clause considers the following types of disabilities to be eligible for a deduction:

1. Locomotor Disability: This indicates that the concerned person is suffering from an acute disability where they can perform limited movements of limbs or have symptoms of cerebral palsy. 
2. Low Vision: Some people have visual function impairments which cannot be totally cured with the help of surgery. They need consistent support from specialised devices to see their surroundings. These people can also claim income tax deductions under Section 80U.
3. Blindness: There are about 34 million people in India suffering from blindness. It is a typical state where the vision of a person is limited by an angle of 20 degrees or even worse at times, leading to the complete absence of sight. 
4. Mental Retardation: Those having subnormal intelligence levels or mental abilities that are notably below average are held under this type. These people usually have limitations in adaptive functioning abilities, too. 
5. Leprosy Cured: This segment includes people who have been diagnosed and cured of leprosy. In the last 20 years, about 14 million cases have been recorded and this section gives tax relief to those who still have deformities due to the disease. 

Besides the cases mentioned above, individuals with hearing impairment exceeding a loss of 60 decibels also fall under the 'disability' category. Therefore, they can claim a deduction under Section 80U, besides saving tax on FD interest or related investment income. 

To claim a deduction under Section 80U of the Income Tax Act 1961, there is no specific investment requirement. The deduction is provided based on the taxpayer's disability, regardless of whether they have made any investments.

Deduction Limit Under Section 80U

The limit of deduction as per Section 80U is based on the severity of a person’s disability. Here, you can take a quick look at the deduction limits applicable at present:

Condition 1: When a Person Has a Disability Between 40% and 80%

People under this category can claim a maximum deduction of ₹75,000 in a financial year.

Condition 2: When a Person is Suffering from Severe Disability (More than 80%)

Applicable only for the old tax regime, Section 80U provides a tax deduction for severely disabled individuals under these conditions: 

• In these cases, the Income Tax Department extends the deduction limit to ₹1.25 lakh. 
• Note that to qualify for the stated benefits, an authorised medical facility must specify the degree of a person's disability. 
• Moreover, the certificate issued has to be in the correct format, stating the actual reason for disability and the disability percentage (as determined by the healthcare firm). 
• The following entities are eligible for determining the percentage of disability of an individual:
• A neurologist with a Doctorate (DM)
• A chief medical officer of a government hospital
• A civil surgeon
• Others (as specified under the IT Act)

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How to Claim an Income Tax Deduction Under Section 80U?

For making a successful claim, it is essential to follow a predefined process. Here, is an easy 6-step guide to help with claiming deductions under Section 80U: 

Step 1: Request a medical certificate from an authorised healthcare establishment. The certificate needs to declare the percentage and nature of the disability.

Step 2: Make sure the certificate is as per the guidelines mentioned by the Income Tax Department.

Step 3: Retain a copy of the certificate and necessary documents for verification purposes.

Step 4: Fill out the Income Tax return form Form 10-IA and enter the necessary details under the segment related to Section 80U.

Step 5: Choose an appropriate mode to submit your IT return.

Step 6: Stay prepared for any verification that can be conducted by the Income Tax Department. At that time, you must be ready with all the necessary documents. 

Final Word

Resident individuals who are disabled can claim significant income tax deductions through Section 80U of the IT Act. However, the government allows deductions only for expenses incurred on the maintenance or medical treatment of that individual.

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