SECTION 80DD1 l MEDICAL treatment of
HANDICAPPED DEPENDENTS, ETC.

517. Clarification regarding possibility where, in absence of relevant rules at the time returns for assessment years 1990-91 and 1991-92 were due, certain eligible assessees could not have claimed deduction either under section 80DD or section 80U(1)(iii)

1. Section 80U as it existed till the assessment year 1989-90 and earlier years provided for a deduction in the case of a resident individual assessees suffering from a permanent physical disability (including total blindness).

2. By an amendment made by the Finance Act of 1989 with effect from assessment year 1990-91 the deduction was made also applicable to assessees suffering from mental retardation to the extent specified in the rules made in this behalf by the Board.  Though this amendment came into force w.e.f. 1-4-1990, the rule referred to therein viz., rule 11D(ii) defining “mental retardation”, has been notified only on 27-1-1992 though with retrospective effect from 1-4-1990.  Thus, it is possible that, in the absence of relevant rules at the time the returns for the assessment years 1990-91 and 1991-92 were due, certain eligible assessees could not have claimed the deduction under section 80U(1)(iii).

3. A similar issue has arisen in respect of section 80DD, which was inserted by the Finance Act, 1990 w.e.f. 1991-92.  This section provides for a deduction in respect of medical treatment, training and rehabilitation of handicapped dependants of assessees.  The deduction is applicable if the dependant is suffering from a permanent physical disability including blindness or is subject to mental retardation being a permanent physical disability or mental retardation specified in the rules made in this behalf by the CBDT.  Though this section became effective from the assessment year 1991-92 the rule specified therein viz., rule 11A was introduced only on 27-1-1992 though with retrospective effect from 1-4-1991. It is possible therefore that certain eligible assessees may not have claimed the deduction due to absence of rules at the relevant time when the return for the assessment year 1991-92 was due.

4. It is clarified that such of those assessees in whose cases the assessments, for these assessment years have already been made, or intimations under section 143(1)(a) have already been issued, are free to file rectification applications under section 154 or revision petitions under section 264 enclosing proper medical certificates and such petitions shall be admitted by the concerned authorities, if necessary by condoning the delay, and shall be disposed of on merits.  Where any refund is due on this account the same shall be granted.

5. In the cases of those assessees in whose cases the assessments are still pending or no intimation under section 143(1)(a) has so far been served, they may file revised returns for the limited purposes of claiming deduction under either section 80U(1)(iii) or section 80DD and, for this purpose, the Board, in exercise of the powers vested in it under section 119(2)(a) of the Income-tax Act, hereby extends the time limit mentioned under section 139(5), till 31-12-1993, for filing such revised returns for the aforesaid assessment years. The Assessing Officers are authorised to deal with such returns on merits according to law and grant refunds wherever due.

6. If there are any other cases of hardship, not covered by this Circular, the same be brought to the notice of the Board for appropriate action.

Circular : No. 653, dated 15-6-1993.

518. Whether, 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.

Circular : No. 702, dated 3-4-1995.

519. 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 dependent 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 dependant, 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 Income-tax Act, 1961 during the Financial year 1998-99 and onwards.

Circular : No. 775, dated 26-3-1999.