CAN I CLAIM DEDUCTION U/S 80DD & 80U SIMULTANEOUSLY?

CAN I CLAIM DEDUCTION U/S 80DD & 80U SIMULTANEOUSLY?




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DEDUCTION U/S 80DD

Query 1]

  1. I am working in State Bank of India, Mouda Branch . I am suffering from locomotors disability with 50% disability. My wife is household lady not filling any return also suffering locomotors disability (50% disability). I shall be thankful if you can highlight the provision of section 80DD & 80U. Can I claim both the section in my return and get the deduction in Income tax? [Purushottam Daga]

  2. Sir, can you highlight the difference between section 80DD & 80U? As read in the previous issues of Tax Talk, both is only in respect of disability. [Pankaj Raikwad]

  3. Can you please enlighten the deduction admissible u/s 80DD? Can it be claimed in the F.Y. 2009-10, though it is not claimed in the earlier years? Do I need to keep the expenses Bills for claiming the deductions? [Lalit Agrawal]

Opinion:

Deduction U/s 80DD

Deduction under this section is available to an individual/HUF who incurs any expenditure for the medical treatment, training and rehabilitation of a disabled dependent or Deposits any amount in schemes like Life Insurance Corporation for the maintenance of a disabled dependant. A deduction admissible u/s 80DD is of Rs 50,000/- in normal course. Where the dependant is a person with a severe disability, a higher deduction of Rs 1,00,000/- is allowed. The term ‘dependent’, as mentioned above, refers to the spouse, children, parents and siblings of the assessee who are dependent on him for maintenance and who themselves haven’t claimed a deduction for the disability in computing their total incomes u/s 80U. The dependant for the purpose of section 80DD has to be a “person with a disability”.

Deduction U/s 80U

Section 80U of the I.T. Act, 1961 allows a deduction to an individual who is resident and who at any time during the previous year is certified by a medical authority to be a person with disability. The deduction under this Section is a sum of Rs 50,000/- in normal cases and if the person is suffering from a severe disability (80% or more) then with effect from F.Y. 2009-10, a sum of Rs. 1,00,000/- is allowable as deductions.

Deduction U/s 80DD VS. U/S 80U

Section 800DD provides for deduction if the assessee has a dependent with disability whereas section 80U provides for deduction to the assessee himself who is a person with disability.

“Person with Disability” for the purpose of section 80DD & 80U means a person suffering from not less than 40% of any of the disability given below:
i) blindness
ii) low vision
iii) leprosy-cured
iv) hearing impairment
v) locomotor disability
vi) mental retardation
vii) mental illness
viii) austim
ix) cerebral palsy
x) multiple disability referred to in clauses (a), (c), & (h) of section 2 of the National Trust for welfare of persons with Austim Cerebral Palsy, Mental Retardation & Multiple Disabilities Act-1999.

  1. Polio leads to locomotor disability & the disability is well covered within the meaning of the word “person with disability”. Both the deduction, i.e., deduction under section 80DD and deduction under section 80U, have their own characteristics & and the person can claim deduction under both these sections
  2. Above deduction can be claimed in the F.Y. 2009-10 even if the same is not claimed in the earlier years. The deduction admissible is an ad-hoc deduction and as such no bills are required to be kept for claiming the deductions.

Readers may refer Tax Talk dated 26.07.2010, 05.07.2010 & 28.06.2010 wherein various the provision has been appropriately elaborated.

Query 2]

Sir, My grandmother who is aged 66 years is housewife & presently do not have any source of income. She had purchased a plot in the F.Y.1984 -85 for the consideration of Rs. 13,500/-. Now in the current financial year, she has sold it for Rs. 3.90 Lacs (whereas as per stamp duty the valuation worked out by sub registrar is Rs 4.86 Lacs).

Kindly let me know

  1. What will be the long term capital gain and how much will be the tax payable?

  2. Whether she is entitled for basic exemption of Rs. 2.40 Lacs being a senior citizen?

  3. Besides Rs. 2.40 Lacs, as basic exemption, whether she can get relief up to Rs 1 Lacs more by investing in the scripts of small saving scheme as other tax payers get. Kindly Reply. [ak5032155@gmail.com]

Opinion:

  1. Cost inflation Index for the F.Y. 1984-85 is 125 & for the F.Y. 2010-11 has been notified as “711”
  2. The indexed cost of acquisition shall be Rs. 76,788/- [Rs. 13,500/- * 711/125].
  3. Sale consideration, for calculating the capital gain shall be taken as Rs. 4,86,000/-.
  4. Long term capital gain shall be Rs. 4,09,212/- [4,86,000/- less 76,788/- ]
  5. Basic exemption limit can be utilized again the long term capital gain (LTCG). Effectively, as she does not have any other source of income, she is entitled to reduce the amount of basic exemption limit against the long term capital gain. Resultantly, her taxable LTCG would be Rs.1,69,212/- which is taxable @ 20% u/s 112 of the I.T. Act-1961.
  6. She is not entitled to the deduction under chapter VI-A (i.e., Rs. 1 Lacs u/s 80C towards LIC/PPF/ NSC/ Post Office etc or Rs. 20,000/- u/s 80D towards Mediclaim, etc) from the amount of Long Term Capital Gain. However, she can invest the amount in the bonds issued by the NHAI/ REC & save tax u/s 54EC of the I.T.Act-1961.

DEDUCTION U/S 80DD

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