Section 80DD Tax Exemption for the People with Disabilities as per Budget 2022 | The
Finance Act 2022 proposes an amendment to section 80DD to specify that the deduction will
also be allowed when the scheme pays an annuity or lump-sum payment to a beneficiary
who is a disabled dependent of the person during the life of the person upon reaching the
age of 60. the individual and the individual stop paying the fee or premium under the scheme.
Section
80DD allows a deduction to be made to a resident individual for filing an
amount with an insurance scheme if the scheme pays an annuity or lump-sum
payment to a beneficiary who is a dependent of that individual with a
disability in the event of that individual's death.
This
deduction is not allowed if the scheme provides for an annuity or lump-sum
payment to a beneficiary who is a dependent of that person with a disability
during that person's life.
Download and Prepare at a time 50 Employees Form 16 Part
A&B for the Financial Year 2021-22
During
the presentation of the union budget for 2022, Minister of Finance Nirmala
Sitaraman announced the weakening of tax benefits for a person when an
insurance company pays an annuity to a disabled beneficiary during the life of
the applicant.
He
stated that a parent or guardian of a person with a disability can take out
insurance for that person. This law provided for a deduction to a parent or
guardian only if the capital or annuity benefit was available to the disabled
person after the death of the subscriber, parent or guardian.
There
may be situations where dependents with a disability may be required to pay an
annuity or a lump sum even while their parents/guardians are alive.
He
proposed to allow the payment of an annuity and a one-time allowance for
disabled dependents during the life of parents/guardians, or for
parents/guardians who have reached the age of sixty.
To
this end, section 21 of the Treasury Act 2022 amends the current provisions of
section 80DD as follows:
Change
section 80DD.
21.
In section 80DD of the Income Tax Act, effective April 1, 2023——
(I)
in paragraph (2) of paragraph (a), the following paragraph is replaced, namely:
"(A)
The regime referred to in subparagraph (b) of paragraph (1) provides for the
payment of an annuity or a lump sum to a dependent as a person with a
disability -
(i)
in the event of the death of a person or member of an undivided Hindu family on
whose behalf the accession to the regime was effected; or
(ii)
After such individual or undivided member of a Hindu family reaches the age of
sixty years or older and the payment or deposit under such scheme has been
stopped; "
Download and Prepare at a time 50 Employees Form 16 Part B for the Financial Year 2021-22
Explanation
of amended provisions
Paragraph
21 seeks to amend section 80DD of the Income Tax Act regarding the deduction
for alimony, including the treatment of a dependent who is disabled.
The
provisions of this section, inter alia, provide for a deduction to the benefit
of a person or an integral Hindu family residing in India from expenses
incurred for the treatment (including care), education and rehabilitation of a
dependent of a person with a disability; or the amount paid to a life insurance
company (LIC) or any other specified insurer, administrator or company in
connection with a disabled dependent support scheme.
Paragraph
(2) of the same paragraph provides that the deduction is allowed only if the
payment of annuity or capital is made in favour of a dependent, disabled
person, in the event of the death of an individual or a family member. The
Hindu on whose behalf she has signed up for this scheme and the commissioner
nominates either the dependent or any other person to collect payment on her
behalf for the benefit of the disabled dependent. Paragraph (3) of this section
provides that if the burden of disability precedes a person or member of a
Hindu undivided family, the amount deposited under this scheme shall be deemed
to be the valuer's income for the previous year in which that amount was
received by the valuer. to the check and will therefore be taxed as income for
the previous year.
Download and Prepare at a time 100 Employees Form 16 Part
A&B for the Financial Year 2021-22
It
is proposed to replace paragraph (a) of paragraph (2) of this section to
provide that the deduction specified in paragraph (b) of paragraph (1) of this
section is allowed if the regime provides for the payment of an annuity or a
lump sum in favour of a dependent, a person with a disability, in the event of
the death of the natural person or undivided member of the Hindu family in
whose name the registration was made; or upon reaching the age of sixty years
or more of a Hindu undivided family member, and the payment or deposit under
such scheme has ceased.
It
is also proposed to include a new paragraph (3A) providing that the provisions
of paragraph (3) do not apply to the amount received by the defendant as
incapacitated prior to his death from an annuity or lump sum payment on the
application of the condition referred to in proposed paragraph (ii) of
paragraph (a) of paragraph (2).
These
amendments will come into effect on April 1, 2023, and will therefore apply to
the 2023-2024 assessment years and subsequent assessment years.
Existing
Section 80DD Provisions: Before Changes Proposed by Treasury Act 2022
The
present provision of section 80DD, inter alia, provides for a deduction for an
individual or HUF resident in India in respect of (a) medical expenses
(including care), education and rehabilitation of a dependent person who is a
person with a disability; or (b) the amount paid to the LIC or any other
specified insurer, director or company in connection with a disabled dependents
scheme.
2.
Paragraph 2 of the aforementioned paragraph provides that a deduction is
allowed only if the payment of annuity or capital is made in favour of a
dependent person, in the event of the death of the person or member of the HUF
on behalf of whom the entry was completed so that the regime was completed.
3.
Paragraph (3) of the above article provides that if the disabled person is near
death to an individual or a member of the HUF, the amount deposited with that
body shall be deemed to be the appraiser's income in the previous year in which
that amount was received by the appraiser for verification and therefore, will
be taxed as income for the previous year.
4.
Paragraph (4) of the above section provides for the delivery of a copy of the
medical certificate in the prescribed forms and methods (see Rule 11A) to claim
the deduction specified in this section, together with the return of income
referred to in section 139, in respect of the year of assessment for which
deduction is requested.
Download and Prepare at a time 100 Employees Form 16 Part B for the Financial Year 2021-22
Section
80DD was introduced by the Treasury Act 1998, replacing and merging then
Section 80DD and Section 80DDA.
It
was felt that parents or guardians of disabled dependents might not be required
to bear annual medical expenses for disabled dependents.
However,
the parent or guardian will always feel the need to provide future support for
the disabled dependent. Section 80DD has been enacted to provide a parent or
guardian with a choice of medical expenses or the future needs of a disabled
dependent, as the case may be. With this provision, a parent or guardian can
claim a deduction of Rs. 75,000/Rs. 1.25.000 for the treatment and future needs
of a dependent disabled person in the manner most appropriate to their needs.
The Finance Act 1998 allowed a deduction of up to Rs. 40,000 under section 80DD. The Finance Act 1999 amended the provisions of this section to provide for a one-time deduction of Rs. 40,000, regardless of actual expenses. This was done to eliminate the difficulty in providing actual proof of expenditure. The 1999 Financial Memorandum Bill states: “There were reservations that this provision, as it stands, could create difficulties for such appraisers, as it could lead to a situation where appraisers might need proof of such expenses. such discomfort to the guardians of the disabled person is proposed to allow a deduction of Rs 40,000/- in such cases.
Download and Prepare One by One Form 16 Part A&B and Part
B for the Financial Year 2021-22
