Tax leeway available for disabled and their family
If you have been tending to the needs of a disabled in an era where costs are on a spiral and looking for some support, the taxman offers a shoulder. There are tax benefits which come to the rescue of differently-abled or their family. Find out the expenses that can be claimed.
Burdened by the high maintenance and medical expenses for the differently-abled family member? The finance minister has just eased your worries by offering an additional deduction of Rs. 25,000 under the Budget 2015, which can be claimed by differently-abled persons or their immediate family members.
The new limits for deduction offered for disabled under the Section80U orSection 80DD starting financial year 2015-16 are Rs. 75,000 (Rs. 50,000 earlier) for disability. Those suffering from severe disability can claim Rs. 1.25 lakh (Rs. 1 lakh earlier).
Unlike other deductions one need not preserve the bills of expenses during the year and calculate the actual expenses incurred. This is a lumpsum tax benefit, which can be claimed if a person has been disabled anytime during the previous year.
This deduction is beneficial as it can be claimed over and above the Section 80C basket.
The tax benefit is allowed for disabilities such as blindness (or low vision), leprosy, hearing impairment and mental retardation, locomotor disability, mental illness, autism, cerebral palsy or multiple disabilities.
So, either the disabled himself or one of the specified family members can claim the tax benefit on expenditure for the medical treatment, nursing, training and rehabilitation of a disabled dependent, amount paid for special insurance cover from Life Insurance Corporation (LIC), Unit Trust of India or any other insurer to take care of the maintenance of such dependent.
But can you claim for your remote cousin who has been disabled? Not really, as the Income Tax Act specifies a disabled dependent for individuals as spouse, children, parents, brother or sister. The benefit can be claimed only if the differently-abled is wholly or mainly dependent on the person claiming the benefit.
Both the disabled and the family member cannot claim the tax leeway. Disability deduction for self can be claimed under Section 80U, while disability for dependent can be claimed under Section 80DD.
A certificate of the illness from a specialist in a government hospital or a neurologist (MD) and Form 10-IA for those suffering from cerebral palsy or autism would be needed. The certificate needs to be renewed after the specified period, so ensure you keep an eye on the year in which the document is up for renewal.
Also, if the entire amount spent is taken care of by an employer or an insurance company then no deduction is permitted. If partial expenses are taken care of by insurance or employer then one needs to claim only the balance amount as deduction.
If a dependent is a patient, a taxpayer’s liability shrinks by Rs. 15,000 – 19,000 in the highest income bracket.