If you have chosen the old tax regime, you should know that you can claim a deduction for expenses incurred for a disabled person when filing your income tax return (ITR) to save on taxes.
There are two deductions under sections 80DD and 80U, using which an individual can reduce their total taxable income. By reducing the total income, ultimately an individual is paying a lower quantum of tax.
Read More: Income tax return filing: 8 documents that you need to file ITR-2 form
What is the difference between section 80DD and 80U tax deduction
While both the deductions under sections 80DD and 80U are meant for disabled persons, there is a fine difference as to how they are applied.
“One of the major differences between section 80DD and section 80U is that 80U is available to the taxpayer himself who is suffering from any disability. Whereas 80DD is available as a deduction in respect of maintenance including medical treatment of a dependent (spouse, children, parent, brother and sister) who is a person with disability,” says CA Deepak Chopra, Direct Tax committee Chairman, Karnataka State Chartered Accountants Association (KSCAA).
Both deductions cannot be claimed on the same expense. If you are a person with disabilities, you can claim a deduction under section 80U. However, this deduction is only available if your caretaker or family members have not already claimed a deduction under section 80DD for taking care of you.
What are the conditions under which section 80DD tax deduction can be claimed
As per Dr. Suresh Surana, a practicing chartered accountant, section 80DD provides that this deduction can be claimed with respect to:
a. Expenses incurred for the medical treatment (including nursing), training and rehabilitation of a dependent relative; or
b. Deposited any amount into a notified scheme framed by the Life Insurance Corporation of India (LIC) or any other specified person for the maintenance of such handicapped dependent relative.
You can claim a deduction of flat Rs 75,000 under section 80DD. “However, for claiming a fixed sum of Rs 1.25 lakh as deduction under section 80DD, the dependent family member should be severely disabled i.e., a person with 80% or more of one or more disabilities,” says Surana.
The entire list of eligible disabilities is defined by the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. The list of what constitutes severe disability is referred to appropriate sections of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.
When are the situations when a disabled person can claim a tax deduction for disability under section 80U
Section 80U allows an individual to claim a deduction provided that the disabled person has been certified by the medical authority as a person with disability at any time during the financial year and he/she has not claimed any deduction under section 80DD.
According to Chopra, the following are the conditions for availing section 80U tax deduction:
- The taxpayer should be a resident individual (the deduction is not available to firms, companies, etc), and
- If disability is 40% or more but less than 80%: A fixed deduction of flat Rs 75,000 is allowed, or
- If the disability is severe (80% or more): The deduction available would be Rs 1.25 lakh.
According to chartered accountant Chirag Chauhan, for the purpose of section 80U, disability has been defined as one of the following:
- Blindness
- Low vision
- Leprosy-cured
- Hearing impairment
- Locomotor disability
- Mental retardation
- Mental illness
“The section also defines a severe disability, which refers to a condition where the disability is 80% or more. Severe disability also includes multiple disabilities, autism and cerebral palsy,” says Chauhan.
Read More: INCOME TAX RETURN FILING: Do’s & dont’s
Additional formalities: When is Form 10-IA required to be filed
“You must note that for claiming a deduction under section 80U you need to file form no. 10-IA where the person with disability or severe disability is suffering from autism, cerebral palsy or multiple disability. This Form 10-IA has to be e-filed. For all other cases a form as prescribed under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) is required,” says Chopra.
” Taxpayers should also note that the disability for which a reassessment after a specified period as mentioned in the aforesaid certificate by medical authority in Form 10-IA is required, deduction cannot be claimed after the expiry of the aforesaid certificate unless a fresh certificate has been obtained from the medical authority. Further, a flat deduction of Rs 75,000 can be claimed irrespective of the actual expense incurred whereas in case of specified severe disability (such as Autism, Cerebral Palsy, etc.), the quantum shall be enhanced to Rs 1.25 lakh,” says Surana.
As per Surana, the deadline for filing Form 10IA is the same as the deadline for furnishing ITR, i.e., July 31, 2024, for FY 2023-24 (AY 2024-25).
How to file Form 10-IA online on the e-filing ITR portal
Here’s a step-by-step guide on how to file Form 10-IA online on the e-filing ITR portal:
Step 1: Go to the e-filing ITR portal- https://www.incometax.gov.in/iec/foportal/ and login using your credentials. Click on ‘e-File’ and then ‘Income Tax Forms’ and then ‘File Income Tax Forms’.
Source: https://eportal.incometax.gov.in/iec/foservices/#/dashboard
Step 2: A new web page will open, and it will have three options, out of which you need to click on ‘Persons without Business/Professional Income’. The first form under this section is Form 10-IA, click on ‘File Now’ and select the Assessment year for which the form is to be filed and click on the proceed button.
Source: CA Chirag Chauhan
Step 3: On a new webpage certain details are asked. Fill the below details in the form:
- Disability Certificate No
- Date of registration of Disability Certificate
- Details of Authority, address, doctor or officer issuing the Disability Certificate
- Details of disabled person like Name of the person, PAN no, address and disability certificate no
- Level of disability i.e. Normal or Severe disability to be selected from the drop down
- Details of disability suffered to be selected from the drop down
- Whether the disability is progressive or non-progressive and whether it will be improved or not
- Whether the reassessment is possible
Once the details are filled attach the disability certificate and click on the proceed button
111686447Source: CA Chirag Chauhan
Step 4: Now preview the form details and click on ‘Proceed to E verify’ button
You can e-verify the form either through:
- Aadhaar OTP
- Digital Signature Certificate (DSC)
- Electronic Verification Code (EVC)
111686493Source: CA Chirag Chauhan
“Once verification is done save the acknowledgement details so that you can fill it up in the ITR form. The new Form 10IA will ensure no fake deduction is claimed, as was seen in the past. The Form itself is not new, what’s new for this year is the fact that now this Form has to be filed online,” says Chauhan.
