Tax relief on caring for a disabled dependent

Only a family that takes care of a disabled member can truly understand what they’re going through. It is never an easy journey–emotionally as well as in terms of expenses. But there can be some monetary relief that families of disabled dependents can claim at the time of filing income tax returns.

The Income Tax Department allows deductions under section 80DD to individuals and Hindu Undivided Family (HUF) on the expenses made to take care of a disabled or differently-abled dependent. This deduction is available when the dependent is differently-abled and wholly dependant on the individual or HUF claiming the deduction.

There is also a Section 80U that allows the disabled person to claim deductions. What is important to note is that the same deductions cannot be claimed by the individual or HUF under Section 80DD if they have been claimed by the disabled individual under Section 80U.

To claim deduction under Section 80DD, the following conditions have to be met:

  • For an individual taxpayer, the dependent has to be a spouse, child, parent or sibling
  • For an HUF, the dependent has to be a member of the HUF
  • The taxpayer claiming the deduction should have incurred expenses for the medical care, training and rehabilitation of the disabled person
  • The taxpayer should have deposited money in an insurance scheme for the maintenance of the dependent
  • The disability of the dependent should not be less than 40% and defined under Section 2(i) of the Persons of Disabilities Act, 1995
  • The disabilities that are covered under the section include mental retardation, cured leprosy, loco motor disability, hearing impairment and vision impairment

If the above mentioned conditions are met, the taxpayer can claim deductions to the tune of the following amounts:

  • Rs 75,000 for FY2015-16 where disability is less than 80% and more than 40%
  • Rs 1,25,000 for FY2015-16 where disability is more than 80%

These deductions are allowed irrespective of the actual expenses incurred. This means that the full amount can be claimed even if the expenses have not been that high. The government has even increased the deduction amounts by Rs 25,000 for FY2015-16 from what the allowed deductions were in the previous financial year.

To claim deductions under Section 80DD, the taxpayer needs to produce a certificate of disability from specified medical authorities.

This is how you can claim deductions under Section 80DD for caring for a differently-abled family member while e-filing your income tax returns.

This article was published on Yahoo Finance on 5 July 2016.

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