Deduction Under Section 80DD and Deduction Under Section 80DDB

Deduction in respect of expenditure on training/medical treatment of a dependent, being a person with disability [Section 80DD]:

A resident individual/HUF, incurring expenditure on maintenance of relative dependent, being a person with disability, can claim deduction under section 80DD. Deduction is available in respect of any of the following:

(a) Expenditure incurred on medical treatment (including nursing), training, rehabilitation of a dependent person with disability.

(b) Amount paid or deposited under a scheme of LIC or any other insurer or UTI or specified company duly approved by the Board, for maintenance of dependent person with disability.

Dependent person with disability means:

1) In case of an individual, it will include spouse, children, parents, brothers and sisters of the individual, or any of them who is mainly or wholly dependent on such individual; and

2) In case of a HUF, it will include any member of the HUF, who is mainly or wholly dependent on such HUF.

Provided that such dependent person has not claim any deduction under section 80U.

Disability Means:-

Such person is suffering from a specified disability which generally includes blindness, low vision, leprosy-cured, hearing impairment, locomotor’s disability, mental retardation and mental illness [see section 2(i) of the Person with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 ], it will also include “autism”,

“cerebral palsy”, and “multiple disability”, referred to in clauses (a), (c) and (h) of section 2 of National Trust for welfare of Person with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.

Person with severe disability means:-

1.A person with 80% or more of one or more disabilities, as referred to in section 56(4) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or

2.A person with severe disability referred to in clause (o) of section 2 of the National rust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).

Amount of deduction

If the taxpayer incurs any expenditure as mentioned in (a) or (b) above, then a flat deduction of Rs. 75,000 is available, irrespective of the amount of such expenditure.

However, if the dependent person is suffering from severe disability (i.e., disability of 80% or above), then the amount of deduction will be Rs. 1,25,000.

Other points to be kept in mind

Following important points should be kept in mind while claiming deduction under section 80DD:

1. The taxpayer should obtain a copy of certificate (Form No. 10-IA) issued by the medical authority (fresh certificate is required in case of reassessment of disability after the expiry of the period mentioned in original certificate).

2. If the dependent predeceases the taxpayer or the member of HUF referred to above, then amount paid or deposited in (b) above, shall be charged to tax in the hands of the taxpayer for the previous year in which such sum is received.

Illustration

Brother of Mr. Raja (a resident) is totally blind and is dependent on Mr. Raja. During the year 2016-17, Mr. Raja has incurred expenditure of Rs. 10,000 on training and rehabilitation of his brother. Can Mr. Raja claim any deduction in respect of expenditure incurred by him on maintenance of his physically handicapped brother?

In this case, all the criteria of section 80DD are satisfied and hence, Mr. Raja can claim a flat deduction of Rs. 1,25,000 under section 80DD (since his brother is suffering from 100% disability).

Suppose in the above case, instead of 100% disability, his brother is suffering from disability of less than 80%, then the amount of deduction will be limited to Rs. 75,000.

Deduction in respect of expenditure on medical treatment of specified diseases. [Section 80DDB]:

As per section 80DDB, a taxpayer can claim deduction in respect of expenditure incurred by him on medical treatment of specified diseases. The provisions in this regard are as follows:

1) Deduction under section 80DDB can be claimed by an individual or a HUF, who is resident in India.

2) Deduction is available in respect of amount actually paid by the taxpayer on medical treatment of specified disease or ailment (prescribed by the Board, see rule 11DD for prescribed disease or ailment).

3) In case of an individual, the aforesaid expenditure should be incurred on medical treatment of an individual or wholly/mainly dependent spouse, children, parents, brothers and sisters of the individual; and

4) In case of a HUF, expenditure should be incurred on the medical treatment of any  member of the family, who is wholly/mainly dependent on such HUF.
The tax payer has to obtain the prescription for the medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed.

Amount of deduction

Amount of deduction will be lower of the following:

(a) amount actually paid on medical treatment specified above; or

(b) Rs. 40,000.

However, the limit of Rs. 40,000 will be increased to Rs. 60,000, if the expenditure is incurred on medical treatment of a senior citizen (i.e., any resident individual of age of 60 years or above but less than 80 years and to Rs. 80,000 if the expenditure is incurred on the medical treatment of super senior citizen i.e. resident individual of the age of 80 years or above).
Other points to be kept in mind

Following important points should be kept in mind while claiming deduction under section 80DDB:

1. The taxpayer should obtain a copy of certificate (Form No. 10-I) issued by a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed, working in a Government hospital.

2. From the amount of deduction computed in aforesaid manner, amount, if any, received by the taxpayer from any insurer or from his employer, by way of reimbursement for such expenditure shall be deducted.

Illustration

During the financial year 2016-17, Mr. Raja spent Rs. 1,00,000 on medical treatment of specified diseases of his brother (age 48 years) who is wholly dependent on him. He received Rs. 25,000 by way of reimbursement of such expenditure from a medical insurance policy. Can he claim any deduction in respect of expenditure incurred by him on medical treatment of specified diseases?
 In this case, all the conditions of section 80DDB are satisfied and hence, Mr. Raja can claim deduction under section 80DDB. Deduction under section 80DDB will come to Rs. 15,000 (i.e., Rs. 40,000 maximum limit of deduction – Rs. 25,000 reimbursement from a medical insurance policy). If his brother is a senior citizen (i.e. resident and of the age of 60 years of above but less than 80 years), then the amount of deduction will be Rs. 35,000 (i.e., Rs. 60,000 maximum limit of deduction – Rs. 25,000 reimbursement).

Suppose in above case, the amount received from insurance policy is Rs. 65,000 instead of Rs. 25,000, then the amount of deduction will be NIL (in both the situations), since the amount of reimbursement exceeds the maximum amount of deduction i.e., Rs. 40,000 or Rs. 60,000, as the case may be.