Raising the limit of deduction under section 80DD and 80U for persons with disability and severe disability

[Admin TMI]

Question - What are the changes in limit under section 80DD and section 80U in Finance Bill 2015 ?

[Admin TMI]

Raising the limit of deduction under section 80DD and 80U for persons with disability and severe disability

The existing provisions of section 80DD, inter alia, provide for a deduction to an individual or HUF, who is a resident in India, who has incurred-

(a) Expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability as defined under the said section; or

(b) paid any amount to LIC or any other insurer in respect of a scheme for the maintenance of a disabled dependant.

The section presently provides for a deduction of fifty thousand rupees if the dependant is suffering from disability and one lakh rupees if the dependant is suffering from severe disability (as defined under the said section).

The existing provisions of section 80U, inter alia, provide for a deduction to an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability (as defined under the said section).

The said section provides for a deduction of fifty thousand rupees if the person is suffering from disability and one lakh rupees if the person is suffering from severe disability (as defined under the said section).

The limits under section 80DD and section 80U in respect of a person with disability were fixed at fifty thousand rupees by Finance Act, 2003. Further, the limit under section 80DD and section 80U in respect of a person with severe disability was last enhanced from seventy five thousand rupees to one lakh rupees by Finance (No.2) Act, 2009.

In view of the rising cost of medical care and special needs of a disabled person, it is proposed to amend section 80DD and section 80U so as to raise the limit of deduction in respect of a person with disability from fifty thousand rupees to seventy five thousand rupees.

It is further proposed to amend the section so as to raise the limit of deduction in respect of a person with severe disability from one lakh rupees to one hundred and twenty five thousand rupees.

These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

AI Summary

Deduction limit increase for disability: enhanced tax deductions for ordinary and severe disability, effective from the following assessment year. Increase in deduction limits under section 80DD and section 80U raises permitted tax deductions for persons with disability and persons with severe disability. The proposal increases the deduction ceiling for expenditures on medical treatment, nursing, training, rehabilitation, and insurer-maintenance schemes for disabled dependants under section 80DD, and for certified disabled individuals under section 80U, and specifies that the revised limits apply from the start of the financial year following enactment.