Exemptions Under Income Tax Act

There are special provisions in the Income Tax Act for persons with disability and for the parents/ legal guardians of persons with disability. The relevant sections are reproduced below.

Section 80 U of the Income Tax Act 1961: Allows an exemption of Rupees Forty Thousand from the income of the assessee with disability.

Requirement for availing the discount: Disability Certificate issued by a physician, an Oculist, or a Psychiatrist as the case may be, working in a Government Hospital

Section 80 DD of the Income Tax Act 1961: Parent or relative upon whom the person with disability is dependent is allowed deductions of Rupees Forty Thousand for maintenance, which includes medical treatment of person with disability. The specifics of the deduction allowed are contained in the extracts reproduced below.

Visitors are urged to take these as pointers, to help them know where to look for the appropriate rule. The published income tax rules, with their periodic amendments.

And remember: you can always give your suggestions for changes in the income tax act. If you don't try, it won't happen!

Income Tax Act Extracts
Section 80DD

Rule 11D specified categories to be considered as "physical disability" for the above sections.

Permanent physical disability:

Physical disability shall be regarded as a permanent physical disability if it falls in any of the categories specified below, namely:
  1. permanent physical disability of more than 50 percent in one limb; or
  2. permanent physical disability of more than 60 percent in two or more limbs; or
  3. permanent deafness with hearing impairment of 71 decibels and above; or
  4. permanent and total loss of voice.

Blindness:

Blindness shall be regarded as a permanent physical disability, if it is incurable and falls in any of the categories specified below, namely:

All with corrections
Better eye Worse eye
6/60-4/60 or field of vision 110-20 3/60 to Nil
3/60 to 1/60 or field of vision 100 FC at 1 foot to Nil
FC at 1 foot to Nil or field of vision 100 FC at foot to Nil or field of vision 100

Mental retardation

Mental retardation shall be regarded as a mental retardation if Intelligence Quotient is less than 50 on a test with a mean of 100 and a standard deviation of 15 such as the Vechsle Scale.

Indirectly Connected Provisions

Deductions are allowed to persons making donations to registered trusts and societies doing work for the handicapped. The relevant sections are 80G and 80GGA.

Under Section 80G deduction from income is allowed at 50 percent of the amount donated to the eligible institution. The amount on which deduction is claimed under the section, however, cannot exceed 10 percent of the gross total income exemptions. This is only in respect of certain specific projects for research, development etc. (Section 80GGA)

Deductions in respect of donations may be claimed by all assessees, ie, individuals, Companies etc.