When compared to a non-disabled individual, a disability requires an additional income to maintain the same level of life. The Income-tax Act of 1961 has numerous measures to provide relief to differently-abled people. On this International Disability Day, let us have a look at them.
“The tax laws that take into account the problems that people with disabilities encounter give tax benefits and income deductions.” “These are available for both the differently abled individual and the carer,” explains Aarti Raote, partner at Deloitte India. She outlines the possible deductions as well as the requirements that must be followed to take advantage of them.
Section 80U allows a person with a handicap to claim a tax deduction. To be eligible for the deduction, the level of disability must be 40% or more as confirmed by the notified medical authority. The deduction for persons with impairments is Rs 75,000 and Rs 1,25,000 for people with severe disabilities (>80%). Aside from a valid certification, no further supporting documents or evidence of costs are necessary. Physical challenges such as blindness, leprosy cure, hearing impairment, locomotor disability, mental illness, autism mental retardation, and so on have been defined as disabilities.
Section 80DD allows a tax deduction for a family member or HUF for medical treatment or care or the payment of a premium for the maintenance of a differently abled person who is completely reliant on the family member for support and upkeep. The deduction for payment under the insurance scheme would be available to the disabled person if the disabled person is the beneficiary on the death of the family member in whose name the subscription is paid, or if the family member reaches the age of 65 or older and payments to the scheme are discontinued. The scheme’s beneficiaries should be handicapped people.
Depending on the severity of the disability, the deduction is limited to Rs 75,000 or Rs 1,25,000 per year. Family members include parents, siblings, spouses, and other family members. To claim this deduction, a valid medical certificate must be submitted with the tax return.
“The aforementioned deductions are only available to residents and are mutually exclusive,” she adds.
There are additional disability insurance options available. This type of insurance protects against the risk of lost income due to disability. When a person is engaged in an accident that results in disability, it covers a percentage of the lost income as well as medical expenses. Incapacity insurance can provide coverage for both short- and long-term disability.