Tax
Benefits for
Disabled
By CA
. Chirag Chauhan
Page
1
chirag_cha@yahoo.com
Tax b
enefits to
individual who are
disabled
,
Parents
who have
dependents
who are
disabled
including
minor
and
certa
in benefits to private sector for
providing employment opportunit
ies to
disabled
As per recent estimate there are more than 70 million peop
le in India who are
disabled
. The challenges and
hardship which they face are enormous form getting basic education, rehabilitation, c
ontinuous cost of
medical requirements and getting job or practising a profession or vocation. The government of India has
provided various concessions and rese
rvations to empower
disabled
person and their families.
There are many
disabled
people and families who are tax payers and there are many individuals who have
dependents who are
disabled
but are not aware of the provision of the various Acts which provides various
benefits and concession in tax. Further government has a
lso provided concession to private sector to
encourage them to appoint
disabled
person.
The article highlights the benefits government provides in Income Tax Act, Professional Tax and a scheme to
encourage private sector to provide employment oppor
tunities to
disabled
.
The deduction under section 80U, 80DD
,
80DDB
and 10(14)
under
Income T
ax Act and
P
rofessional
T
ax
Act
are direct deduction were as through proper tax planning one can claim benefit
under section 64(1) of
Income Tax A
ct. There
is also one scheme introduce by Government to encourage private sector
to
employee
person w
ho are
disabled
. 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
Medical
A
uthority
to be a person with
D
isability
.
Deduction allowed
:
I
n case of
Person with Disability
(at least 40%)
Rs
50,000
/
-
is allowed. In case of
Person
with
Sev
ere 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
Retardatio
n 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 Disa
bil
ities 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
Tax
Benefits for
Disabled
By CA
. Chirag Chauhan
Page
2
chirag_cha@yahoo.com
(
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
Point
s
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 who
se
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 fro
m 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 tr
eatment of depende
d disable or has
invested in
a particular scheme
of LIC
for benefit
of the d
epended 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 ove
r 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
d
ependant 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.
I
mportant Point
s
to be noted:
Tax
Benefits for
Disabled
By CA
. Chirag Chauhan
Page
3
chirag_cha@yahoo.com
A)
In the case of an individual the d
eduction 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 ca
n 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 In
dividual 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 hi
mself 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 Deducte
d 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, 19
95. 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 ho
spital
.
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
80DD
B 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 al
lowed
:
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 c
ase 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 o
f 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
Tax
Benefits for
Disabled
By CA
. Chirag Chauhan
Page
4
chirag_cha@yahoo.com
local authority and any other hospital with whic
h arrangements have been made by the Government
for the treatment of Government servants
C)
"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 p
revious year.
Important Point
s
to be noted:
A)
T
he 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 Neuro
n 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 Point
s
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 employer
s
pay Rs
800/
-
Per Month as the same is exempted. However for employee, who is blind or orthopaedically
handicapped with disabi
lity 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.
Tax
Benefits for
Disabled
By CA
. Chirag Chauhan
Page
5
chirag_cha@yahoo.com
Who can claim the benefit
:
Individual who has a minor child suffering from any disability of the nature
specified in sectio
n 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 Point
s
to be noted:
A)
As the income of the c
hild 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 inc
ome of
individual bu
t will be ass
essed 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 bene
fit
:
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 ca
se 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 Point
s
to be noted:
A)
The individual shall forward the certificate to employer who will produces the aforesaid certificate
before the prescribed authority in respect of the first assessment year for which h
e 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 relati
on to Maharashtra State).
In
most
states t
he 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
-
A
pril
-
2008
Deduction
/
B
enefits:
Payment of the employer's contribution to the Employees Provident Fund and
Employees State Insu
rance for the first three years by Government.
Important Point
s
to be noted:
Tax
Benefits for
Disabled
By CA
. Chirag Chauhan
Page
6
chirag_cha@yahoo.com
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 Comp
etent Authority
, first time when such benefit under EPF and ESI is
claimed.
D)
The Government
will directly provide employe
r'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
disabled
people. The exemption under 80
U and deduction for expenditure incurred for medical treatment
under 80DD
should be
increased to
Rs.
2,00,000/
-
, considering ri
sing 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
accessib
le
for wheelchair users
and
for
most o
ther
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
disabled
person is good step by
government. As per annual report
2009
-
10 by ministry of social justice and empowerment,
u
nder 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.th
ough the
init
ially 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, gov
ernment 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
disabled
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 o
n wheelchair
. H
owever slowly the environment is
changing and corporate have realised that providing employment is not just part of CSR but the
differently
ential able people are itself great resource which can contribute equally for the objectives and
goal
s of the organisation and society at a large.
Disclaimer
:
The information is as per l
aws applicable in count
r
y 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 de
cision or the outcome of the information presented above.
About the author:
The author CA. Chirag Chauhan is member (Membership Number 131194) of the
Institute of Chartered Accountant of India. He himself is paraplegic, wheelchair bound. For any queries he
can be contacted at chirag_cha@yahoo.com
On Saturday, May 23, 2015 1:54 AM, "'Sameer' sameer.latey@yahoo.co.in [aaykarbhavan]" <aaykarbhavan@yahoogroups.com> wrote:
Dear List friends,
Prior to the enactment of the 2015 budget, the tax-exempt limits for conveyance allowance for normal & blind employees was Rs. 800 per month & Rs. 1,600 per month respectively. The recent budget has raised the tax-exempt limit for normal employees to Rs. 1,600 per month.
Kindly inform me if any increase has been made in the tax-exempt conveyance allowance limit for blind employees or it is still Rs. 1,600 per month.
Thanking you all in advance for any & all assistance.
Regards
Mr. Sameer Latey,
Mumbai, India
Mumbai, India
__._,_.___
Posted by: Dipakkumar Shah <cadjshah@yahoo.com>
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