Last updated: July 3rd, 2024 5:49 PM

Tax Benefits For Persons with Disability

Tax benefits for persons with disability assure security and comfort for the differently-abled after the death of a parent or caregiver. There exists a big fraction of disabled people and families in India who qualify as taxpayers but are unaware of the benefits provided to them in the various Acts which give special provisions and concessions in tax to the differently-abled. The government has also provided allowances to the private sector as gestures of encouragement towards disabled people. While significant tax reliefs were already available for the support and maintenance of persons with special needs under the Income Tax Act of 1961, Budget 2022 has brought about a new tax benefit/ deduction for the parent/guardian of disabled people.

Income Tax Act 1961

Income tax is collected by the Indian Government from the earning members of the country. Calculated using the gross yearly income, it often differs depending upon the income ranges of the individual. The Income Tax Act of 1961 is responsible for the collection, monitoring, and administration of this tax. Apart from authorising taxes, this act helps state tax provisions and deductions for not just lowering tax liability of regular taxpayers but also for the specially-abled. (under Section 80DD) Tax deduction limits that were earlier set to Rs 75 000 for individuals with 80% or more disability and Rs 50 000 for 40% or more disabilities were altered under the Income Tax Act’s Section 80U and made available for Rs. 1.25 lakhs for a severe disability and Rs. 75, 000 for less than 40% disabilities. Section 80U offers tax benefits for an individual who categorizes into the disabled group, and a tax deduction of up to Rs 75000 on income can be claimed. This tax standard operating procedure can be claimed even in instances where the policy benefits/payouts start while the buyer of the policy is still alive.

Budget 2022

As per the new budget, if the parent/caregiver of a disabled person buys a savings life insurance policy with the latter as the beneficiary then they would qualify for deduction from gross income before tax. The new proposals for disabled persons were taken to be an empathetic and thoughtful move since it infers security to help dependents after the demise of their caregivers. It allows them to benefit from the policies bought by their guardian, and in a way helps them give financial independence. In an encouraging move, the Government has recognized that the dependents might need money before the demise of the policyholder is still alive. It shows that the country is moving in the direction of financial inclusion. Moreover, this gives a much-required push to insurance penetration in the country and further the goal of providing financial security for each household in India. Terms for claiming benefits Deductions can easily be claimed on insurance premiums with insurers and on expenses sustained on the maintenance of a disabled dependent, which includes children. Disabilities covered under this act include low vision, blindness, leprosy-cured, hearing impairment, and mental retardation.

Procedure to Register

• To register the claim, a guardian or caretaker is required to present authorised medical certificates indicating the disability along with the return of income certificate.
• An expired disability certificate is also considered valid in the expiry year of the certificate claim, but a new document would be required for the following year under Section 80U.
• Authorised certificates can be obtained after diagnosis from a neurologist or psychiatrist around you.