Analysis, Income Tax

Deductions for the differently abled under Section 80U

The government of India has provided various benefits to empower the differently abled and their families. One of the benefits under the Income tax Act for differently abled taxpayers to reduce their taxable income is a provided under section 80U. The criteria of disability for claiming the deduction of taxable income is fixed by the government.

Who can claim this benefit?

Tax benefit is available to any resident individual who is certified as ‘a person with prescribed disability’ by the ‘medical authority’.

Deduction under section 80U

Persons with lower disability are entitled to lower deduction limits whereas persons with higher or complete disability are eligible for higher deduction limits.

  • Person with disability: A person with disability (i.e.  least 40% of a disability) is eligible for a deduction of Rs. 75,000.
  • Person with severe disability: A person with severe disability (i.e. 80% or more of one or more disabilities) is eligible for a deduction of Rs. 1,25,000.

Does having regular salary preclude a person with disability from claiming deductions under section 80U?

Short answer: No.

Sardar Harpreet Singh vs. Commissioner Of Income Tax (Cited 9+ times)

Allahabad HC, decided on 11th September, 1990

Reasoning: Earlier, the purpose of section 80U was to provide deductions to people with permanent physical disability which could substantially reduce their ability to engage in a gainful employment. Even if a person is earning a monthly remuneration, had they not had the disability, they could have been earning a better salary. The Court struck down the ruling of the AAC and the Tribunal and answered the question in favour of the assessee.

Author’s Note: The legislature has done away with the requirement of ‘substantially reducing the ability to engage in gainful employment or occupation’. In fact, amendments have been made over time to now include people with not only ‘permanent, physical disabilities’ but mental as well as temporary disabilities.

It is not a condition precedent for allowing the deduction under this provision that the assessee should be unemployed or should not be earning anything. merely because the assessee is earning income from some business, the deduction under 80U of the Act cannot be disallowed for, had he not suffered from a permanent physical disability, he could have earned more.

Can a claim of deduction under section 80U be disallowed on the grounds of a technicality?

Short answer: No.

Satish Gujral vs. Additional Commissioner Of Income Tax

ITAT Delhi, decided on 22nd July, 2016

Reasoning: As per law, a document certifying the disability by a medical practitioner has to be produced on a year-to-year basis. However, in this case, the assessee had been claiming deductions under section 80U since 1971-72. He claimed that the necessary document might have gotten lost over time and he should be granted deduction under the section permanently. Both the ITO and CIT had no doubt that the disability was genuine and permanent. The Tribunal held that disallowance cannot be made on the ground of a mere technicality and allowed the deduction claimed by the assessee.

We find that the ld. CIT(A) has directed the AO to allow deduction in view of the fact that there is no doubt that the is suffering from permanent impairment of hearing which is irreversible and disallowance cannot be made on the ground of mere technicality. Accordingly, we find substance in the finding of the ld. CIT(A) and direct the AO to allow deduction u/s 80U of the Act as claimed by the assessee.

Does hypertension qualify as a disability on which deduction can be granted under section 80U?

Short answer: No.

Commissioner of Income Tax vs. E. V. Subramanian

Madras HC, decided on 17th June, 1999

Reasoning: The medical certificate had declared that the assessee was suffering from hypertension for the past 10 years which was controllable but not curable. However, the certificate did not classify hypertension as a disability. The Court opined that stress is a result of working under pressure and as a result, hypertension is not an uncommon by-product. It reduces the capacity of the person to deal with stress but cannot be regarded as a ‘permanent physical disability’. The Court answered the question in favour of the Revenue disallowing the deduction.

Author’s Note: It would be interesting to see how the court deals with the same facts post amendment.

The doctor who certified the illness of the assessee, had not certified that the assessee was suffering from any permanent physical disability. All that is set out in the certificate is that the assessee is suffering from essential hypertension for the past ten years, that the disease is only controllable, and not completely curable, and that this disease substantially reduces his active working capacity. This certificate does not satisfy the requirement of s. 80U.

Written By Ankit Sinha, Product Manager @ Riverus

Also Read: Per Incuriam Cases

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