How income tax provisions ease the burden for caregivers of disabled dependents

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Article 21 of the Indian Constitution — Protection of Life and Personal Liberty — states: “No person shall be deprived of his life or personal liberty except according to the procedure established by law."

Among the many other provisions and laws of the land, Section 80DD of the Income Tax Act, 1961, (the Act) is a vital provision aimed at offering relief to those caring for disabled dependents. This section allows tax deductions for expenses related to medical treatment, training, and rehabilitation of dependents, as well as for contributions to insurance schemes that ensure the welfare of dependents after the caregiver’s demise.

The section provides a fixed deduction of ₹75,000 from gross total income for expenses incurred by resident individuals for looking after a dependent with a disability. The limit increases to ₹125,000 for severe disabilities. Eligibility requirements include:

· Medical treatment and rehabilitation: Expenses for medical treatment, nursing care, training, and rehabilitation of a disabled dependent.

· Insurance or annuity plans: Contributions to approved schemes are eligible for deduction. These schemes must pay an annuity or lump sum to the disabled dependents upon the taxpayer's death or after they reach age 60 with discontinued contributions.

· Medical certificate: A certificate from a medical authority is required.

The intention behind Section 80DD is to ease the financial burden on caregivers and to create a fund for dependents following the caregiver’s demise, addressing inflation and healthcare costs.

Prior to 1 April 2023, Section 80DD did not permit deductions for deposits made under approved schemes where payments were made to dependents before the caregiver’s death. This raised concerns