Rule 11A

Permanent physical disability for
purposes of section 80DD

The statutory background

11A.1 Under section 80DD of the Act, as inserted with effect from 1-4-1991, a resident individual or HUF is eligible for deduction towards expenditure incurred for the medical treatment (including nursing), training and rehabilitation of a person who is a relative of the individual or a member of the HUF and who is suffering from a permanent physical disability (including blindness). From 1-4-1999, the scope of this deduction was enlarged so as to cover, apart from the above-mentioned expenditure, any payment or deposit made under any scheme framed in this behalf by the LIC or UTI which satisfies certain specified conditions. For the assessment years 1991-92 to 1998-99, the quantum of deduction was fixed as Rs 15,000, and for the assessment year 1999-2000, the quantum was fixed as the expenditure incurred, subject to a maximum of Rs. 40,000. From the assessment year 2000-2001, the quantum of deduction will be at a flat figure of Rs. 40,000. The permanent physical disability is required to be specified in the rules in this behalf. Rule 11A specifies the categories of such disabilities.

The specified disabilities

11A.2 The categories of disabilities, etc., specified in the rule 11A are as follows:

      (i)  permanent physical disability shall be regarded as a permanent physical disability if it falls in any one of the categories specified below, namely:—

          (a)  permanent physical disability of more than 50 per cent in one limb ; or

          (b)  permanent physical disability of more than 60 per cent in two or more limbs; or

          (c)  permanent deafness with hearing impairment of 71 decibels and above ; or

          (d)  permanent and total loss of voice;

     (ii)  blindness shall be regarded as a permanent physical disability if it is incurable and falls in any one of the categories specified below, namely:

All with corrections

Better eye

Worse eye

(a) 6/60-4/60

3/60 to Nil

or

 

Field of vision

 

110-20

 

(b) 3/60 to 1/60

F.C. at 1 foot to Nil

or

 

Field of vision

 

100

 

(c) F.C. at 1 foot to Nil

F.C. at 1 foot to Nil

or

or

Field of vision

Field of vision

100

100

(d) Total absence of sight

Total absence of sight;

 

    (iii)  Mental retardation shall be regarded as a mental retardation if intelligence quotient is less than 50 on a test with a mean of 100 and a standard deviation of 15 such as the Wechsle scale.

Deduction not linked to actual expenditure

11A.3 The CBDT have clarified that the allowance of this deduction at a flat rate is statutory in nature once the prescribed are fulfilled and the assessee has incurred some expenditure. - Circular No. 702, dated 3-4-1995 [Annex 11A.1].

Proof for incurring expenditure

11A.4 It has been clarified that, for purposes of deduction of tax at source from salaries, it would be sufficient if the employee furnishes a medical certificate from a Government hospital and a declaration in writing duly signed by the claimant certifying the actual amount of expenditure on account of medical treatment (including nursing), training and rehabilitation of the handicapped dependent, and receipt/acknowledgement for the amount paid or deposited in the specified schemes of LIC or UTI. The person responsible for deduction of tax at source need not insist upon of vouchers/bills by the employees for having incurred expenditure - Circular No. 775, dated 26-3-1999 [Annex 11A.2].

Judicial decisions

11A. 5 The decided cases given under rule 11D may also be referred to, as they are relevant for purposes of determining the question of allowability of the deduction under section  80DD, read with rule 11A, as well.

annexure to rule 11A

Annex 11A.1

Circular No. 702, dated 3-4-1995

As long as conditions mentioned in section 80DD are fulfilled and assessee has incurred any expenditure on medical treatment, etc., of handicapped person, deduction as envisaged in section 80DD will be allowable in full

1. Under the provisions of section 80DD of the Income-tax Act, 1961, an assessee who is resident in India being an individual or a Hindu undivided family is allowed a deduction of Rs. 15,000 for expenditure incurred in respect of handicapped dependants subject to the following conditions:—

      (i)  the handicapped dependant is a relative of the assessee and is not dependant on any person other than the assessee for his support or maintenance;

     (ii)  he is suffering from a permanent physical disability (including blindness) or mental retardation and the same is certified by a Physician, Psychiatrist, etc., working in Government hospital;

    (iii)  the disability has the effect of reducing considerably such person’s capacity for normal work or engaging in a gainful employment or occupation;

    (iv)  the assessee has incurred any expenditure for medical treatment (including nursing), training and rehabilitation of the handicapped dependant.

2. The Board has received several representations seeking clarification regarding the quantum of deduction available in relation to the expenditure incurred on the handicapped dependants.

3. It is hereby clarified that the deduction under section  80DD of the Income-tax Act, 1961 is statutory in nature. Therefore, as long as the conditions mentioned in the section are fulfilled, and the assessee has incurred any expenditure on medical treatment, etc., of the handicapped person, the deduction as envisaged in the section will be allowable in full.

Annex 11A.2

Circular No. 775 dated 26-3-1999

Whether it would be sufficient if the employee furnishes a medical certificate from a Government Hospital and a declaration in writing duly signed by the claimant certifying the actual amount of expenditure on account of medical treatment (including nursing), training and rehabilitation of the handicapped dependant and receipt/acknowledgement for the amount paid or deposited in the specified schemes of LIC or UTI

1. Section 80DD, substituted for sections 80DD and 80DDA by the Finance (No. 2) Act, 1998, lays down that the deduction on account of expenditure incurred by way of medical treatment (including nursing), training and rehabilitation of a handicapped dependant or amount paid or deposited in specified schemes of Life Insurance Corporation or Unit Trust of India for the maintenance of handicapped dependent, shall be limited to Rs. 40,000 in the aggregate while computing the total income of the parent or the guardian of such handicapped dependant.

2. It has come to the notice of the Board that some of the DDOs are asking the employees to submit medical vouchers/bills in connection with the expenses incurred on the medical treatment of their handicapped dependant apart from a certificate from the Government hospital regarding the permanent physical disability or mental retardation of the handicapped dependant.

3. It is clarified that it would be sufficient if the employee furnishes a medical certificate from a Government Hospital and a declaration in writing duly signed by the claimant certifying the actual amount of expenditure on account of medical treatment (including nursing), training and rehabilitation of the handicapped dependant and receipt/acknowledgement for the amount paid or deposited in the specified schemes of LIC or UTI. Therefore, DDOs may not insist upon production of vouchers/bills by the employees for having incurred expenditure on medical treatment of their handicapped dependants for allowing the deduction under section 80DD for the purpose of computing tax deductible at source.

4. This clarification is applicable for the purpose of tax deduction at source from salaries under section 192 of the Income-tax Act, 1961 during the financial years 1998-99 and onwards.