Deduction for medical expenditure for a deprendent

Introduction
Section-80DD of the Income Tax Act, 1961 provides for deductions towards expenditure incurred for medical treatment of a dependent who is having a specified disability. This section also provides deduction towards amount deposited under an insurance plan of LIC or other insurers specifically designed for a disabled person. We will discuss in this article, the various conditions and the quantum of deduction as provided in section 80DD which an assessee can claim while filing his Income Tax Return.

Who is eligible to claim deduction under section 80DD??
Section-80DD provides for deduction to two categories of taxpayers:-

• Individuals
• Hindu Undivided Family (HUF)
  But, deduction under this section shall be allowed to RESIDENT ASSESSEE ONLY. As such, Non-Resident assessee is not allowed to claim deduction u/s 80DD.

Who is ‘Dependent’ for section-80DD??
“Dependent” means dependent wholly or mainly for his support and maintenance and who has not claimed deduction under section-80U in computing his total income for the relevant previous year.
Dependent includes the following:-

But, following two points need to be kept in mind:-

1. Such disabled person should be wholly or mainly dependent on the assessee for his support and maintenance AND
2. Such disabled person should not have claimed deduction u/s 80U while computing his own income for that year.

What are the types of expenditures eligible for deduction under section 80DD??
The type of expenditures eligible for deduction under section-80DD is as follows:

• Any expenditure incurred for the medical treatment (including nursing), training and rehabilitation of such disabled dependent person. or
• Any amount paid or deposited towards an insurance policy of LIC or other insurer in respect of maintenance of such disabled dependent person.

Note:
Insurance policy should provide for payment of annuity or lump sum amount for the benefit of such dependent in the event of death of individual or member of HUF in whose name policy has been subscribed. The assessee shall nominate either the dependent with disability or any other person or trust to receive the payment on his behalf, for the benefit of such dependent.

Quantum of Deduction u/s 80DD

• In case of dependent with disability:- Rs. 75,000
• In case of dependent with severe disability:- Rs. 1,25,000

Certificate of Medical Authority to be furnished:-

• For claiming deduction, the assessee shall furnish a copy of the certificate issued by the medical authority along with the return of income.
• Prescribed Medical Authority are:-

1. A Neurologist having a degree of MD in Neurology (in case of a child, a pediatric Neurologist having equivalent degree) or
2.  A Civil Surgeon or Chief Medical Officer (CMO) of a government hospital

• Where the condition of disability requires reassessment, a fresh certificate from the medical authority shall have to be obtained after the expiry of the period mentioned on the original certificate.
• If the disabled person is suffering from autism, cerebral palsy or multiple disabilities, Form 10-IA is to be furnished by the assessee.

Disabilities covered under section 80DD:-
The following disabilities are covered under section 80DD:-

1. Blindness
2. Low Vision
3. Hearing Impairment
4. Autism
5. Cerebral palsy
6. Leprosy-cured
7. Locomotor Disability
8. Mental retardation/illness

‘Person with Disability’ vs. ‘Person with Severe Disability’:

• A person having at least 40% of any one or more of the above disabilities shall be treated as ‘Person with disability’.
• A person having at least 80% of any one or more of the above disabilities shall be treated as ‘Person with severe disability’.

Taxability in case disabled person predeceases:-
If the dependent with disability predeceases the individual or member of HUF referred above, an amount paid or deposited towards insurance policy shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee and charged to tax.