Section 80DD of the Income Tax Act, 1961, inter alia, provides for a deduction to an individual or HUF, who is a resident in India, and

• Incurs expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or
• Pays any amount to LIC or any other insurer in respect of a scheme for the maintenance of a disabled dependant.

 The section provides for a deduction of fifty thousand rupees if the dependant is suffering from disability and one hundred thousand rupees if the dependant is suffering from severe disability.

“Dependant” in the case of an individual, has been defined to mean the spouse, children, parents, brothers and sisters of the individual or any of them, and in the case of a Hindu undivided family, a member of the Hindu undivided family, if such person is dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance.

 In view of the rising cost of medical care and special needs of a differently abled person, Finance Bill, 2015 proposes to amend section 80DD of the Income-tax Act so as to raise the limit of deduction in respect of a person with disability from fifty thousand rupees to seventy five thousand rupees and in respect of a person with severe disability, from one hundred thousand rupees to one hundred and twenty five thousand rupees.

 This was stated by Shri Jayant Sinha, Minister of State in Ministry of Finance in written reply to a question in the Lok Sabha today.

Tax deduction for dependants with disability increased to strengthen relief and cover rising medical and care expenses. Section 80DD grants residents-individuals and Hindu undivided families-a deduction where they incur medical, training or rehabilitation expenditure for a dependant with disability or pay premiums for an insurer maintenance scheme; it distinguishes between disability and severe disability and defines 'dependant' by familial relation and financial dependence. The Finance Bill, 2015 proposes to raise the statutory deduction ceilings for both disability categories to address increased care and medical costs, while preserving the alternative of insurer-paid maintenance schemes as qualifying for deduction.