The Indian Income Tax Act has several provisions for taxpayers who have disabilities. One such provision is Section 80U of the Income Tax Act, which provides tax benefits to individuals with disabilities. In this blog, we will discuss Section 80U of the Income Tax Act, Assessment Year (AY) 2016-17, and its various provisions.
What is Section 80U of the Income Tax Act?
Section 80U of the Income Tax Act provides tax deductions to individuals with disabilities. The section was introduced to promote the well-being of individuals with disabilities and to provide them with financial assistance. According to this section, an individual with a disability can claim a tax deduction up to Rs. 75,000 if he/she satisfies the conditions laid down under the section.
Who is Eligible for Section 80U Deduction?
To claim deductions under Section 80U, the taxpayer must be a resident individual who has been certified by a medical authority as a person with a disability. The disability can be physical or mental, and the severity of the disability should be at least 40%. The taxpayer must also possess a certificate of disability from a medical authority, which specifies the nature and extent of the disability.
Deduction Available under Section 80U:
The deduction available under Section 80U is up to Rs. 75,000 for individuals with a disability. The deduction amount is determined based on the severity of the disability, with a higher deduction being available for individuals with a higher degree of disability. The severity of the disability is classified into three categories – 40%, 80%, and 100%. Individuals with a disability of 40% or more but less than 80% are eligible for a deduction of Rs. 75,000, while those with a disability of 80% or more are eligible for a deduction of Rs. 1,25,000.
How to Claim Deductions under Section 80U?
To claim deductions under Section 80U, the taxpayer must fill in the applicable ITR form and furnish the certificate of disability issued by a medical authority. The certificate should contain details such as the nature and extent of the disability, and the date from which the individual is considered as disabled. The certificate should also be valid for the assessment year for which the taxpayer is claiming the deduction.
Additional Information about Section 80U:
Disability covered under Section 80U: The section covers a wide range of disabilities, including blindness, low vision, hearing impairment, locomotor disability, mental retardation, mental illness, autism, and cerebral palsy. However, the disability should be certified by a medical authority, and the severity of the disability should be at least 40%.
Deduction under Section 80U can be claimed by the taxpayer himself or by his legal guardian. In case the individual is a minor, the legal guardian can claim the deduction on behalf of the minor.
Deduction under Section 80U is available in addition to the standard deduction of Rs. 50,000 available to all individuals. This means that a taxpayer with a disability can claim a total deduction of up to Rs. 1,25,000 (Rs. 75,000 under Section 80U and Rs. 50,000 as standard deduction).
Section 80U deduction is available to individuals who are engaged in business or profession as well. However, the deduction will be available only for the income earned from the business or profession and not for other sources of income.
The certificate of disability issued by a medical authority should be renewed every year to claim the deduction under Section 80U. The certificate should be valid for the assessment year for which the taxpayer is claiming the deduction.
Conclusion:
Section 80U of the Income Tax Act is a beneficial provision for individuals with disabilities. It provides financial assistance to the disabled taxpayers and encourages them to lead an independent life. The deduction available under this section is significant, and it can reduce the tax liability of the taxpayer substantially. However, it is essential to comply with the eligibility criteria and furnish the necessary documents to claim the deduction effectively. Taxpayers with disabilities are advised to seek the assistance of a tax expert or a chartered accountant to understand the provisions of this section and to claim the deduction optimally.
Read more useful content:
- section 145 of income tax act
- section 10e of income tax act
- section 9 of the income tax act
- section 94b of income tax act
- section 206aa of income tax act
Frequently Asked Questions (FAQs)
Who is eligible for deductions under Section 80U of the Income Tax Act?
Answer: Resident individuals who have been certified as a person with a disability by a medical authority are eligible for deductions under Section 80U.
What is the maximum deduction available under Section 80U?
Answer: The maximum deduction available under Section 80U is Rs. 75,000 for individuals with a disability of 40% or more but less than 80%. Individuals with a disability of 80% or more are eligible for a deduction of Rs. 1,25,000.
Can a taxpayer claim deductions under Section 80U for more than one disability?
Answer: Yes, a taxpayer can claim deductions under Section 80U for more than one disability, provided he/she has valid certificates of disability for each disability.
Is the deduction under Section 80U available for the entire financial year?
Answer: Yes, the deduction under Section 80U is available for the entire financial year, starting from April 1 to March 31.
Can the deduction under Section 80U be claimed by a non-resident individual?
Answer: No, the deduction under Section 80U is available only to resident individuals.
Can the deduction under Section 80U be claimed by individuals who are not employed?
Answer: Yes, the deduction under Section 80U is available to all resident individuals who have a certificate of disability issued by a medical authority, irrespective of their employment status.
What is the validity of the certificate of disability issued by a medical authority?
Answer: The certificate of disability issued by a medical authority is valid for the assessment year for which the deduction is being claimed. The certificate should be renewed every year.
Is the deduction under Section 80U available for income earned from all sources?
Answer: No, the deduction under Section 80U is available only for income earned by the individual from business or profession.
Can a taxpayer claim both standard deduction and deduction under Section 80U?
Answer: Yes, a taxpayer with a disability can claim both the standard deduction of Rs. 50,000 and the deduction under Section 80U.
Is it necessary to attach the certificate of disability with the income tax return while claiming the deduction under Section 80U?
Answer: Yes, it is mandatory to attach the certificate of disability issued by a medical authority with the income tax return while claiming the deduction under Section 80U.
