Tax
Benefits for Differently Abled
Tax benefits to individual who are
differently able, Parents who have dependents who are differently able
including minor and certain benefits to private sector for providing employment
opportunities to differently able
As per
recent estimate there are more than 70 million people in India who are
differently able. The challenges and hardship which they face are enormous form
getting basic education, rehabilitation, continuous cost of medical
requirements and getting job or practising a profession or vocation. The
government of India
has provided various concessions and reservations to empower differently able
person and their families.
There are many differently able
people and families who are tax payers and there are many individuals who have
dependents who are differently able but are not aware of the provision of the
various Acts which provides various benefits and concession in tax. Further government has
also provided concession to private sector to encourage them to appoint
differently able person.
The article highlights the benefits
government provides in Income Tax Act, Professional Tax and a scheme to
encourage private sector to provide employment opportunities to differently
able.
The deduction under section 80U,
80DD, 80DDB and 10(14) under Income Tax Act and Professional Tax Act are direct
deduction were as through proper tax planning one can claim benefit under
section 64(1) of Income Tax Act. There is also one scheme introduce by
Government to encourage private sector to employee person who are differently
able. Lets us go through in details all 7 different benefits.
1) Income Tax Act, Section 80U –
Deduction in case of person with disability Who can claim the benefit: Individual who is resident during
previous year and is certified by MedicalAuthority to be a person with Disability.
Deduction allowed: In case of Person with
Disability (at least 40%) Rs 50,000 /- is allowed. In case of Person
with Severe Disability (80% of one or more disabilities) Rs. 1,00,000/- is
allowed.
Important Definitions:
A) “disability” shall have the
meaning assigned to it in clause (i) of section 2 of the Persons with
Disabilities (Equal Opportunities, Protection of Rights and Full Participation)
Act, 1995 (1 of 1996), and includes “autism”, “cerebral palsy” and “multiple
disabilities” referred to in clauses (a), (c) and (h) of section 2 of the
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental
Retardation and Multiple Disabilities Act, 1999 (44 of 1999) B) “medical
authority” means the medical authority as referred to in clause (p) of section
2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights
and Full Participation) Act, 1995 (1 of 1996), or such other medical authority
as may, by notification, be specified by the Central Government for certifying
“autism”, “cerebral palsy”, “multiple disabilities”, “person with disability”
and “severe disability” referred to in clauses (a), (c), (h), (j) and (o) of
section 2 of the National Trust for Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999)
C) “person with disability” means a
person referred to in clause (t) of section 2 of the Persons with Disabilities
(Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1
of 1996), or clause (j) of section 2 of the National Trust for Welfare of
Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple
Disabilities Act, 1999 (44 of 1999)
D) “person with severe disability”
means—(i) a person with eighty per cent or more of one or more disabilities, as
referred to in sub-section (4) of section 56 of the Persons with Disabilities
(Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1
of 1996); or (ii)a person with severe disability referred to in clause (o) of
section 2 of the National Trust for Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).
Important Points to be noted:
A) In few cases medical certificate
will be valid up to a limited period, say five years and requires individual to
reassess himself with the medical authority for fresh certificate. The
deduction can only be claimed were the medical certificate is live, in case it
is expired new certificate is required to claim the deduction.
B) Individual whose income is from
salary, Tax is Deducted from Source (TDS) by employer from monthly salary. The
tax is computed after considering estimated gross total income of the
individual for the entire year and divided by 12 months. Individuals can inform
the employer regarding the benefit under this section, which can be reduce from
gross total income and hence TDS is deducted on the lesser amount
C) For prescribed Forms, see Form
No. 10-IA and Forms prescribed under Persons with Disabilities (Equal
Opportunities, Protection of Rights & Full Participation) Act, 1995.
Medical certificate can be issued by Neurologist having a degree of Doctor of
Medicine (MD) in Neurology (or, in case of children, a Pediatric Neurologist
having an equivalent degree) or A Civil Surgeon or Chief Medical Officer (CMO)
of a government hospital.
2) Income Tax Act, Section 80DD –
Deduction in respect of maintenance including medical treatment of a dependant
who is a person with disability Who can claim the benefit:
Individual or Hindu Undivided
Family (HUF) who is resident during previous year, and has incurred expenditure
in relation to maintenance or treatment of depended disable or has invested in
a particular scheme of LIC for benefit of the depended disable.
Deduction allowed:
A)
Rs
50,000/- for the medical treatment (including nursing), training and
rehabilitation of a dependant, being a person with disability. Or
Rs 1,00,000/- for the medical treatment (including nursing), training and
rehabilitation of a dependant, being a person with Severe disability having
medical certificate granted by prescribed Medical Authority B) Any
amount paid or deposited under a scheme framed by the Life Insurance
Corporation or any other insurer or the Administrator or the specified company
for the maintenance of a dependant, being a person with disability or
person with Severe disability (subject to over all limit of Rs 50,000/-
or 1,00,000/- as applicable)
Important Definitions:
A) “dependant” means—(i)in the case
of an individual, the spouse, children, parents, brothers and sisters of the
individual or any of them;(ii)in the case of a Hindu undivided family, a member
of the Hindu undivided family dependant wholly or mainly on such individual or
Hindu undivided family for his support and maintenance, and who has not claimed
any deduction under section 80U in computing his total income for the
assessment year relating to the previous year
B) Other definitions of
“disability”, “medical authority”, “person with disability” & “person with
severe disability” will be same as mention in section 80 U.
Important Points to be noted:
A) In the case of an individual the
deduction is available to spouse, children, parents, brothers or sisters of the
individual. In the case of HUF the deduction is available to any member of the
HUF
B) Currently LIC is offering Jeevan
Aadhar Plan for claiming benefit under this section.
C) The nomination in case of
insurance taken should be in favour of dependent for receiving the benefit in
lump sum or annuity in event of death of individual or Members of the HUF in
whose name subscription of the scheme is taken. Alternatively nomination can be
in favour of trust for the benefit of dependent
D) In case the dependent
predeceases the individual or the member of the Hindu undivided an amount equal
to the amount paid or deposited under the insurance scheme shall be deemed to
be the income of the Individual or HUF in the year in which such amount is
received and shall accordingly be chargeable to tax as the income of that year.
E) In few cases medical certificate
will be valid up to a limited period, say five years and requires individual to
reassess himself with the medical authority for fresh certificate. The
deduction can only be claimed were the medical certificate is live, in case it
is expired new certificate is required to claim the deduction.
F) Individual whose income is from
salary, Tax is Deducted from Source (TDS) by employer from monthly salary. The
tax is computed after considering estimated gross total income of the
individual for the entire year and divided by 12 months. Individuals can inform
the employer regarding the benefit, which can be reduce from gross total income
computation and hence TDS is deducted on the lesser amount
G) For prescribed Forms, see Form
No. 10-IA and Forms prescribed under Persons with Disabilities (Equal
Opportunities, Protection of Rights & Full Participation) Act, 1995.
Medical certificate can be issued by Neurologist having a degree of Doctor of
Medicine (MD) in Neurology (or, in case of children, a Pediatric Neurologist
having an equivalent degree) or A Civil Surgeon or Chief Medical Officer (CMO)
of a government hospital.
H) The benefit under this section
will be not be available in cases were dependent has avail benefit us 80 U.
3) Income Tax Act Section 80DDB
Deduction in respect of medical treatment, etc Who can claim the benefit: Individual or Hindu Undivided
Family (HUF) who is resident during previous year, and has paid any amount for
the medical treatment of such disease or ailment, for himself or dependent in
case of individual or any member of HUF in case of HUF
Deduction allowed: Rs 40,000/- deduction shall be
allowed or amount actually paid, whichever is less. In case any of the above is
a senior citizen (Above 65 years), an additional deduction of Rs. 20,000 shall
be allowed towards payment of the senior citizen. i.e. in case of senior
citizens the above limit of 40,000 shall be upgraded to Rs.60000.
Important Definitions:
A) “dependant” means—(i)in the case
of an individual, the spouse, children, parents, brothers and sisters of the
individual or any of them;(ii)in the case of a Hindu undivided family, a member
of the Hindu undivided family dependant wholly or mainly on such individual or
Hindu undivided family for his support and maintenance.
B) “Government hospital” includes a
departmental dispensary whether full-time or part-time established and run by a
Department of the Government for the medical attendance and treatment of a
class or classes of Government servants and members of their families, a
hospital maintained by a local authority and any other hospital with which
arrangements have been made by the Government for the treatment of Government
servants
B)
“senior
citizen” means an individual resident in India who is of the age of
sixty-five years or more at any time during the relevant previous year.
C)
Important Points to be noted:
A) The deduction shall be reduced
by the amount received, if any, under the insurance from the insurer or
reimbursed by the employer
B) For availing the deduction a
certificate in the prescribed form from a neurologist, an oncologist, a urologist,
a haematologist, an immunologist or such other prescribed specialists, working
in a Government hospital, has to be submitted.
C) For the purposes of section the
following shall be the eligible diseases or ailments :
(i) Neurological Diseases where the
disability level has been certified to be of 40% and above,—
(a) Dementia ;
(b) Dystonia Musculorum Deformans ;
(c) Motor Neuron Disease ;
(d) Ataxia ;
(e) Chorea ;
(f) Hemiballismus ;
(g) Aphasia ;
(h) Parkinsons Disease ;
(ii) Malignant Cancers ;
(iii) Full Blown Acquired
Immuno-Deficiency Syndrome (AIDS) ;
(iv) Chronic Renal failure ;
(v) Hematological disorders :
(a) Hemophilia ;
(b) Thalassaemia.
4) Income Tax Act Section 10(14)
Rule 2BB Transport Allowance Who can claim the benefit: Salaried Individual
Deduction allowed: Rs 1600 Per Month
Important Points to be noted:
A) Transport allowance is granted
to an employee, to meet his expenditure for the purpose of commuting between
the place of his residence and the place of his duty. Most of employers pay Rs 800/-
Per Month as the same is exempted. However for employee, who is blind or
orthopaedically handicapped with disability of lower extremities, the exempted
amount is Rs 1600/- Per Month
B) Employee can request employer to
structure their pay in such a manner that they receive Rs 1600/- as monthly
transport allowance to claim the benefit
C) Tax Exempt is irrespective of
actual expense. (No bills/receipts needed)
5) Income Tax Act Section 64 Income
of individual to include income of spouse, minor child, etc.
Who can claim the benefit: Individual who has a minor child
suffering from any disability of the nature specified in section 80 U.
Deduction allowed: There is no direct deduction, but
the income generated by minor child who is disable will not be clubbed with
individual
Important Points to be noted:
A) As the income of the child is
not clubbed the child is treated as a separate entity and can file an independent
return with all its benefits. For example, Individual can transfer their
revenue generating asset like fix deposits in the name of disable child and the
interest earned will not be clubbed with the income of individual but will be
assessed separately, which provides significant
scope for tax savings.
B) Further the disable child while
filing its own return can claim benefit under section 80U
6) Profession Tax Act, State Maharashtra Section 27A Exemptions
Who can claim the benefit: Any person suffering from a
permanent physical disability (including blindness), being a permanent physical
disability specified in the rules made in this behalf by the State Government,
which is certified by a physician, a surgeon or an oculist, as the case may be,
working in a Government
Hospital
Deduction allowed: Complete amount of professional
tax payable
Important Definitions:
"Government Hospital"
includes a departmental dispensary whether full time or part time established
and run by a Department of the Government for the medical attendance and
treatment of a class or classes of Government servants and members of their
families, a hospital maintained by a local authority and any other hospital
with which arrangements have been made by the Government for the treatment of Government
servants
Important Points to be noted:
A) The individual shall forward the
certificate to employer who will produce the aforesaid certificate before the
prescribed authority in respect of the first assessment year for which he
claims deduction B) As the professional tax is subject matter of state, which
is responsible for collection, making rules and provide exemption, individual
need to check with respective states for rules if any for exemption.(the above
exemption is in relation to Maharashtra State). In most states the Professional
tax is exempted for disable person.
7) Scheme For Providing Employment
To Persons With Disabilities In The Private Sector
Who can claim the benefit: Private Sector Employers who are
employing person with disability on or after 01-April-2008
Deduction / Benefits: Payment of the employer's
contribution to the Employees Provident Fund and Employees State Insurance for
the first three years by Government.
A) Employees with disabilities,
with monthly wage up to Rs.25000/- per month, working in the private sector
would be covered. Those earning above 25000/- per month will not be eligible
B) The scheme will be applicable to
the employees with disabilities employed covered under the Persons with
Disabilities (Equal Opportunities. Protection of Rights and Full Participation)
Act. 1995 and the National Trust for Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple disabilities Act. 1999.
C) The employers would submit a
copy of the disability certificate including statement, issued to the disabled
employee by the Competent Authority, first time when such benefit under EPF and
ESI is claimed.
D) The Government will directly
provide employer's contribution for the schemes covered under the Employees
Provident Fund & Miscellaneous Provisions Act. 1952 and the employment State Insurance Act 1948. This will be
done in respect of employees for a maximum period of 3 years. Though the
government has provide some relief in tax, however much can be done to further
empower the differently able people. The exemption under 80U and deduction for
expenditure incurred for medical treatment under 80DD should be increased to
Rs. 2,00,000/- , considering rising cost of living and increasing
cost of medicine supplies and
rehabilitation. One of the major problem person with disability faces is in travelling,
most of them spend huge amount on commuting to work places as public mode of
transport is not accessible for wheelchair users and for most other users,
considering this government should increase the limit of transport allowance
exemption for salaried class upto Rs. 4000/- Pm. The introduction of scheme to encourage
private sector to employee differently able person is good step by government.
As per annual report 2009-10 by ministry of social justice and empowerment,
under the scheme, 144 and 261 persons have been registered by Employees
Provident Fund Organization (EPFO) and Employees State Insurance Corporation
(ESIC) respectively till 30.09.2009.though the initially target was to create 1
Lakh job every year. Though the response has been dreadful, government needs to
increase the incentive for further participation by private sector. For
example, government should link incentive for private sector to create work
places accessible, increase the limit from 3 years contribution to life long,
etc. with budget and election coming we can hope some more promises from
government. To support the differently able community not only the efforts from
the government are required but there should be willingness from the corporate
world, to provide them equal opportunity and level playing field. Most of the
corporate offices are not accessible to the person who is on wheelchair.
However slowly the environment is changing and corporate have realised that
providing employment is not just part of CSR but the differentlyential able
people are itself great resource which can contribute equally for the
objectives and
goals of the organization and
society at a large.
Disclaimer: The information is as per laws
applicable in country India.
The information provided above is in good faith and with bonafide intention to
benefit individuals, parents and person with disability including children.
Kindly consult your insurance agent/ legal adviser/ tax consultant prior to any
tax or finance decision. The convoluted legal language has been simplified for
easy understanding. No liability lies with author for misinterpretation or
decision or the outcome of the information presented above.
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