How Section 80U Works?

Under the Income Tax Act, of 1961 by the Indian Constitution individuals who possess a disability under the medical authority have tax deduction benefits under Section 80U. Under this section, any disabled individual with at least 40 percent disability can have a maximum tax benefit of Rs. 75,000 while a disabled individual with more than 80% disability can bear a tax deduction of Rs. 1,25,000.

This act was introduced to reduce the financial challenge to individuals with a disability and provide them relief from the income tax. A medical authority certificate is a must to claim this Section by the Indian Government.

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What is Section 80U?

According to Section 80U, any disabled individual can claim tax deductions on their total income given they have a certificate of a medical authority. The Section 80U eligibility for the disabled should be at least 40% to 80% to claim a tax deduction of Rs. 75,000 on their total income.

A person having disability of more than 80% can claim a tax deduction of Rs. 1,25,000 on total income. The disability definition for an individual can include both physical and mental conditions that can affect the normal life of a person. The conditions for disability can include conditions like:

Blindness: Lack of vision
Low-vision: Vision activity less than 6/18 or 20/60.
Hearing impairment: Lack of hearing ability or less range of frequency of hearing
Mental illness: Any mental disorder
Leprosy-cured: A cured disease of a skin lesion or nerve damage
Locomotor disability: Inability in movement or complications in the musculoskeletal or nervous system or even in both
Mental retardation: Limitation in mental activities or mental functioning

Quantum of Deduction under Section 80U

A deduction of Rs. 75,000 on the income tax is allowed for people with disabilities while for individuals with severe disabilities, the deduction amount increases to Rs. 1,25,000. The decision for disability type is not based on the person’s incapacity but depends on the additional financial needs of a disabled with a genuine medical certificate issued to them for their condition. This certificate needs to be renewed from time to time.

This deduction was made to provide relief to the disabled so that they can save the amount for their medical treatment, rehabilitation, accommodation, and other expenses. The disabled have more financial needs for medical care, assistance devices, and support services for their daily activities.

Note: The deduction amount is valid to citizens of India only who are disabled.

How to Use the 80U Calculator?

The 80U calculator brings relief to disabled individuals to calculate their tax deductions. All you need to do is enter the required information, calculate the tax deductions, and find the result.

The step-by-step guide for using the 80U calculator by TaxBuddy is as follows:

Access the Calculator:

Visit the https://www.taxbuddy.com/ > Resources > Calculators > 80U

Select the Residential Status:

whether Resident individual/ NRI

Select the Financial Year:

whether the financial year is 2021- 22, 2022- 23, 2023- 24

Select Tax regime:

choose whether the Old Tax regime or New Tax regime

Select the Percentage of Disability:

choose the disability degree whether normal disability or severe disability

Click on the ‘calculate’ button. The deducted amount will be determined based on the inputs provided.

The obtained value represents the deducted amount for a disabled individual on their total income.

Example: If you are an individual residing in India with normal disability and want to calculate the tax deduction for this financial year for old tax laws then here’s how it works:

The deduction amount is valid for the old tax regime only
The residential status is valid for the resident individual
The deduction allowed for normal disability is Rs. 75,000 while for severe disability is Rs. 1,25,000
The deduction amount is the same for any financial year

Therefore, the deduction allowed is Rs. 75,000

Benefits of Using an 80U Calculator

The 80U calculator is perfect for those with disabilities as it is used to calculate and estimate eligibility for tax deductions, income tax offers, and benefits under Section 80U. It is provided with high accuracy and is free of charge readily available to use at your convenience. The instant results for eligibility under Section 80U are time-saving and simple.

This reduces the task of the disabled individuals. The compliance of the 80U calculator adheres to the latest tax laws. The calculator can also be used for educational purposes, saving provisions of Section 80U and keeping records for future preferences and documentation for taxpayers.

Documentation and Certification for Section 80U

No other documentation is required other than filling out Form 10-IA for the medical authority of the disabled individual. A valid disability certification from a recognized medical authority is needed. The disability certificate needs to be renewed periodically as it is a crucial document serving for tax deductions. However, if the certificate expires in any financial year then a fresh certificate needs to be applied for the succeeding year to claim the benefits of tax deductions.

Certificates from a known medical authority like a Neurologist, having a degree of Doctor of Medicine (MD) in neurology or civil surgeon or Chief Medical Officer in a government hospital or any other consecutive are valid. The medical authority examines to know about the type and severity of disability. During claiming for tax deduction in Section 80U an income proof with Form 10-IA is essential. It is important to retain all relevant documents for tax deduction to avoid any hurdles. You can even consult a tax advisor if you still have any questions or complications.

Difference Between Section 80U and Section 80DD

The Section 80U provides tax deductions to individuals who hold any disability whether normal or severe while Section 80DD is valid for taxpayers who have paid a premium amount for holding care of their dependents disabled person. The deduction amount under Section 80U vs 80DD can be opted for only if the taxpayer chooses the old tax regime.

The deduction nature has a slight difference between the two sections of the constitution. For Section 80U the individual taxpayer can claim it against their net income while under Section 80DD the taxpayer has to bear the expenses of the dependent’s medical treatment, rehabilitation, and training. The expense is not available for the dependent.

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Frequently asked questions

What is Section 80U and who is eligible for deductions under it?

The Section 80U provides tax deductions for disabled individuals on their total income. Any individual with at least 40% disability is eligible to claim the tax deduction.

How much deduction can I claim under Section 80U?

For an individual with a 40% disability is applicable to claim a Rs. 75,000 deduction amount while for an individual with more than 80% disability is applicable to claim Rs. 1,25,000 as the deduction amount.

How do I calculate my deductions using an 80U calculator?

Choose the financial year, select the residential status, select the percentage of disability, and choose the tax regime. Click on the ‘Calculate; button to find the deducted amount

What documentation is required to claim a deduction under Section 80U?

No documentation is required to claim Section 80U. Just Form 10-IA and a medical certificate are required to be filled out.

Can I claim deductions under Section 80U for a dependent’s disability?

No. Only a person who resides individually can claim the tax benefit under Section 80U.

What is the difference between Section 80U and Section 80DD deductions?

Section 80DD provides tax deductions to the family members of the taxpayer while Section 80U provides tax deductions to the individual themselves.

Is there a limit to the amount of deduction I can claim under Section 80U?

Yes. The deduction amount is limited to Rs. 75,000 for normal disability individuals while Rs. 1,25,000 is limited to individuals with severe disability.

How do I obtain a disability certification for Section 80U deductions?

Reach a neurologist who has a degree or doctorate, a civil surgeon, or a Chief Medical Officer in a government hospital to get a disability certificate for Section 80U.

Can I use the 80U calculator if I have a severe disability?

Yes, 80U calculator by TaxBuddy is available free of cost for anyone to use.

What are the benefits of using an 80U calculator for estimating my tax deductions?

The calculator gives an accurate value while saving time that too at free of cost. This calculator even keeps a record for future reference.