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Deductions for the differently abled under Section 80U of the Income Tax Act

Guest 
on 12 July 2019

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The Indian government has taken various pro-active measures to empower the differently abled and their families. One of the benefits available to them is under Section 80U of the Income-tax Act with a view to reduce their taxable income. The criteria of disability for claiming the deduction of taxable income is fixed by the government.

WHO CAN CLAIM THIS BENEFIT?

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

DEDUCTION UNDER SECTION 80U

Deduction limits are prescribed according to the extent of disability, and persons with lower disability are entitled to lower deduction limits whereas persons with higher or complete disability are eligible for higher deduction limits. The following is the criteria in place as of now -

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.

Let us now look at some important case laws related to this subject.

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 | 11th September, 1990

Reasoning: The court opined that Section 80U was enacted with the purpose of providing deductions to people with a permanent physical disability which could demonstrably reduce their ability to engage in a gainful employment. Even if a person was earning monthly remuneration, had they not had the disability, they could have been earning a better salary. Hence the Court found in favour of the assessee.

Author's Note: The legislature has since 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.

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 | 22nd July, 2016

Reasoning: As per law, a certificate by a medical practitioner stating the disability has to be produced on a year-to-year basis. In the present case, the assessee had been claiming deductions under section 80U since 1971-72. However, it was claimed that the necessary document had gotten lost over time and irrespective of its existence he should be granted deduction under the section permanently. Both the ITO and CIT did not doubt the genuineness and permanence of the disability. The Tribunal ruled in favour of the assessee to hold that disallowance could not be made on the ground of a mere technicality and allowed the assessee's claim for deduction.

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 | 17th June, 1999

Reasoning: The medical certificate produced by the assessee declared that he was suffering from hypertension for the past 10 years and the same was controllable but not curable. However, the certificate did not state hypertension as a disability. The Court was of the opinion that stress resulted from working under pressure and as a result, hypertension could not be said to be an uncommon by-product. It reduced the capacity of the person to deal with stress but could not 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 mentioned above.

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