The Income Tax Act 1961 is the main legislation governing the levy and collection of income tax in India. It is a comprehensive law that provides for the levying, assessment and collection of income tax, as well as the prevention of tax evasion. The Income Tax Act was enacted in 1961 and applied to all parts of India.
It is supplemented by various other Acts and Rules, such as the Companies Act of 1956, the Wealth Tax Act of 1957, etc. The Act defines the various categories of taxpayers, the taxable types of income, the deductions and exemptions available to taxpayers, and the procedures for filing returns, paying taxes and claiming refunds. The Act is amended from time to time to keep pace with changing economic and legal conditions.
Income tax is a duty that is imposed and is expected to be adhered to by all the citizens of India with disciplined deposition. This tax deduction is made based on one’s income exceeding INR 5,00,000 annually. However, it does hold some special deductions for disabled residents. Section 80U is one such example in which citizens can legally apply for a tax deduction.
What exactly is the framework and its benefits are interesting to know.
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All About Section 80U
Section 80U is a tax deduction provision in the Indian constitution applied to citizens with 40% of disabilities. Came into action in 1961, Section 80U under Income Tax Act deals with Indian citizens who have at least 40% of the physical disability that are eligible to abide by this rule.
Who is Eligible for an 80U Deduction?
As per the law, Section 80U category counts on residents in India who have to have a minimum of 40% of physical disability. This is the only requirement to fall into this tax deduction category.
The law also focuses on severe disabilities that count for up to 80% extension. This might include cerebral palsy, multiple disabilities and autism.
Definition of specially-abled
As per Indian Law, specially-abled is defined with a minimum of 40 per cent of physical disabilities declared by a recognised medical authority. This might differ under the Persons with specially-abled (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.
Considering the aforementioned definition, let us have a glance at the seven major disabilities stated by the government:
Low Vision: Low vision refers to those with impaired eyesight that cannot be treated surgically but who can still use their vision with various equipment.
Blindness: According to the definition of blindness, it is the total loss of vision, a field of vision that is restricted by an angle of 20 degrees or worse, or visual disabilities that results in less than 6160 after corrective lenses.
Hearing Issues: Hearing loss of at least 60 dB qualifies as hearing impairment.
Treated Leprosy with Conditions: Individuals who have had leprosy successfully treated but still have paresis in their eyelids and eyes as well as a loss of sensation in their hands or feet. Also, elderly folks and those with severe physical disabilities prevent from completing any useful work.
Mental Retardation: A person with an arrested or incomplete mental development capacity that has led to subnormal intelligence levels.
Loco Motor Disability: A person with majorly restricted movements of limbs due to joint bones or muscle disability.
Mental Illness: mental disorders that are partially related to mental retardation.
Deductions Under Section 80U
As per Section U, Income Tax, deductions of INR 1.25 lakhs will be implied for residents with severe disabilities. Whereas INR 75,000 will be deducted for minors with at least 40% of disabilities. Point to be noted that this is a revised version of deductions that have been made in 2020-21.
How do I Claim Section 80U Benefits?
Section 80U of the Income Tax Act provides deductions for individuals with certain specified disabilities. To claim the deduction, the individual must submit a self-declaration form, along with the relevant medical certificates and disability proof, to their employer or the tax department. The tax department will then assess the claim and, if approved, will issue a certificate of eligibility to the individual. The individual can then submit the certificate and income tax returns to claim the deduction.
What are the Benefits of Section 80U?
Here are the benefits that you need to know before applying for Section 80U, Income Tax:
There are no documentation requirements apart from a certificate from a recognised medical authority certifying the disability.
There is no need to produce bills or other items incurred as a cost of treatment or any other expenses.
However, you are required to fill out different forms in case of mental illnesses and some more disabilities. Similarly, for cerebral palsy and autism form, 10-IA has to be filled.
To file the claim, you need to submit the medical certificate denoting the disability as well as the return of income certificate as per Section 139 for the relevant assessment year.
In case the disability assessment certificate has expired, you can still claim deductions in the year of the certificate’s expiry. However, a fresh certificate will be required from the next year onwards to claim benefits under Section 80U.
Certificates can be obtained from medical authorities as authorised by the government, including an MD in Neurology, a pediatric, urologist, Chief Medical Officer (CMO), or Civil Surgeon at a government hospital.
What is the Difference Between Sections 80U And 80DD?
Section 80U of the Income Tax Act, 1961, provides for a deduction of up to Rs. 75,000 for a person with a disability or caring for a disabled dependent.
Section 80DD of the Income Tax Act, 1961 provides a deduction of up to Rs. 75,000 for medical treatment, training, rehabilitation and maintenance of a disabled dependent.
End Thoughts
Section 80U has been a part of the public initiative towards a progressive India. It strengthens the unprivileged section of society to upgrade their disabled population to live an elevated and secure lifestyle. Being a part of the most complex democracy in the world, this provision has provided financial support to the public and the government for decades.
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FAQs
Can an individual with a prescribed disability of 44% tax deductions under Section 80U?
Yes, to be eligible for Section 80U deductions, an Indian resident has to have a minimum disability of 40% that has been considered by law in the Indian Constitution.
What is the amount of deduction available under Section 80U?
Income tax returns must be filed each year to collect the Section 80CCC tax deduction. A person with a disability can claim a minimum of INR 75,000 on their taxable earning as per Section 80U under Income Tax Act.
Has there been a change in the deduction limits for disabled individuals?
Fresh deduction slabs have been implemented since the 2020-21 financial year that extends a claim up to INR 1,25,000 for people with disabilities. Point to be noted that these disabilities have to be categorised under the disability definition mentioned in Income Tax Act.
Are NRIs covered for the deduction under Section 80U?
No tax deduction provision is covered in Section 80U under Income Tax Act for NRIs. It is restricted to only Indian residents who are taxpayers.
