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Tax and Other Financial Benefits For Persons With Disabilities And Their Caregivers

March 22, 2017

Persons with disabilities are entitled to certain tax benefits, pensions and exemptions from customs duty. Read on to know what these are and how you can avail them.
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Is a person with disability entitled to any tax benefits?

Yes. Under Section 80U of the Income Tax Act, a person with disability (having been certified to have more than 40% of an impairment under the Persons with Disabilities Act 1995 or the National Trust Act 1999) is entitled to a deduction while computing their total income.  

The deduction shall be Rs. 75,000 on the total income. If the dependent has a severe disability i.e. he/she is certified to have more than 80% disability, then the deduction shall be Rs. 1,25,000 on the total income.


Is the caregiver of a person with disability entitled to any tax benefits?

Yes. Under Section 80DD of the Income Tax Act, a caregiver of a person with disability (having been certified to have more than 40% of an impairment under the Persons with Disabilities Act 1995 or the National Trust Act 1999) is entitled to a deduction while computing their total income if:

(i) They have incurred any expenditure for the medical treatment including nursing, training and rehabilitation of a dependent who is a person with disability

(ii) They have paid or deposited any amount under a scheme for the maintenance of a dependent, being a person with disability. This scheme may have been framed by the Life Insurance Corporation or any other insurer etc. This sum must provide for a lump sum payment to the person with disability in the event of the death of the person making the deposit.

Secondly, the person being assessed makes the person with disability the nominee or makes a person tasked with administering the trust in favour of the person with disability.

The deduction shall be Rs. 75,000 on the total income. If the dependent has a severe disability i.e. certified to have more than 80% disability, then the deduction shall be Rs. 1,25,000 on the total income.


Can you open a bank account in the name of your special child?

Yes. The Reserve Bank of India permits savings/fixed/recurring bank deposit accounts to be opened by a minor of any age through his/her natural or legally appointed guardian. There is no distinction carved out between minors with or without disabilities in this regard.


Can you name your special child as your nominee in your insurance/pension scheme?

Yes. Under the Employee Pension Scheme, in case of the demise of the pensioner, a child with a permanent disability will continue receiving payment of monthly children pension or orphan pension, as the case may be, irrespective of age and number of children in the family, for their entire lifetime.


What customs duty do you pay if you import an assistive device? 

Assistive devices, devices for rehabilitation needs, and other aids and appliances are exempt from customs duty while being imported into India.

This has been expanded to include braille paper as per the last budget. This exemption applies so long as the device, aid or appliance is meant for personal use.

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2 comments

  1. As of now, there is no procedure to certify persons with specified learning disabilities (including dyslexia). However once the rules are notified and the person can obtain the certificate it may be possible. The Tax law will also have to be updated, but that may happen in the next budget.

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