80DD Deduction Limit

Housing the mentally or physically challenged members of the family can lead to increased expenses. The Income Tax Act, through Section 80DD, provides some tax relief to ease this burden. So, what exactly is the deduction limit and who can claim it? Let’s understand this in simple terms

What Is Section 80DD?

This section of the Income Tax Act gives a fixed deduction to individuals (residents) or Hindu Undivided Families (HUFs) for expenses related to the medical treatment, care, or insurance of a physically or mentally challenged dependent.
Dependents can include your spouse, children, parents, brothers, or sisters.

Deduction Limits Under Section 80DD

• For disability between 40% and 80%, the deduction amount is ₹75,000.
• For severe disability (above 80%), the deduction increases to ₹1,25,000.
• The deduction is fixed, even if your actual expenses are less than the limit.

What Expenses Are Covered?

• Medical treatment and rehabilitation costs
• Training and nursing-related activities
• Premiums paid toward an approved insurance plan for the dependent

Quick Example

Ramesh supports his brother who has a 60% disability. He spends ₹40,000 on medical care and ₹30,000 on an approved insurance policy. Under Section 80DD, Ramesh can still claim a total deduction of ₹75,000.

Key Points To Remember

• You must have valid proof of disability showing the percentage.
• The dependent should live with you and rely on you financially.
• If the disabled person claims a deduction under Section 80U, you cannot claim under 80DD for the same person.
• Form 10-IA must be filed along with your tax return to claim this benefit.