Understanding the Difference between Section 80C and Section 80U

If you are a taxpayer, then having a health policy gives you dual benefits. It not only covers your medical expenses arising out of hospitalization, therapies, daycare procedures, etc., but also provides tax rebates. You can easily claim a deduction on the premium paid towards the policy. However, the maximum deduction you can get in monetary terms is ₹25,000 under a normal health plan. Whereas, if you are a policyholder of the best health insurance for senior citizens, you can get the maximum monetary reward of ₹50,000. Through this blog, we will talk about various deductions available under section 80C and section 80U of the Income Tax Act.

Section 80C

Section 80C allows you to reduce taxable income by making tax-saving investments with a maximum deduction of ₹1,50,000 every year. This benefit of the deduction can only be availed by individuals and HUF. The deduction can not be availed by companies, partnership firms, and LLPs. Section 80C includes sub section 80CCC, 80CCD (1). 80CCD (1b) and 80CCD (2).

Section 80C Deduction

Section 80U

Section 80U under the Income Tax Act 1961 states the provisions for tax deductions for taxpayers who are specially-abled. As per the law, any Indian resident who has more than 40% disability is considered a person with a disability.

• A person with a severe disability - A condition where the disability is 80% or more.
• A person with a disability - A person who has at least 40% disability, certified by the medical authorities.

Disabilities included:

• Blindness
• Low vision
• Leprosy-cured
• Hearing Impairment
• Locomotor disability
• Mental retardation
• Mental Illness

Authorities which can Issue Certificates under Section 80U

You must be aware of authorities which are eligible for issuing a disability certificate. Hence, you can refer to the following authorities:

• A neurologist with a degree of MD in Neurology
• A civil surgeon working under a government hospital
• A chief Medical Officer working under a Government hospital
• In the case of disabled children, any pediatric neurologist with a degree of MD.

Section 80DD vs Section 80U

According to Section 80DD of the Income Tax Act, the family member or a person’s closest relative can claim a tax deduction. This is applicable to individuals who have paid a specific amount of premium insurance to take care of a disabled person.

Whereas Section 80U provides tax benefits to a person having a disability or severe disability. However, the tax rebate for physically handicapped taxpayers under 80U and 80DD is the same with no change.

Parting Words

Tax deductions are designed to benefit the taxpayers. Section 80U ensures tax benefits to specially-abled people considering their restricted income opportunities and regular medical expenses. This helps them save a good amount of money from their taxable income.

You can also save a significant portion of your taxable income by enrolling in a health plan. The premium paid towards the plan is deductible from your gross income. Hence, this gives you a yearly tax benefit. You can consider buying health policies offered by Niva Bupa, a well-known health insurance provider. It offers a variety of best health insurance plans for individuals and families at affordable prices. You must check out its best health insurance plans to choose the best ones for yourself.

Section 80C

Section 80C allows you to reduce taxable income by making tax-saving investments with a maximum deduction of ₹1,50,000 every year. This benefit of the deduction can only be availed by individuals and HUF. The deduction can not be availed by companies, partnership firms, and LLPs. Section 80C includes sub section 80CCC, 80CCD (1). 80CCD (1b) and 80CCD (2).

Section 80C Deduction

• A person with a severe disability - A condition where the disability is 80% or more.
• A person with a disability - A person who has at least 40% disability, certified by the medical authorities.

Disabilities included:

• Blindness
• Low vision
• Leprosy-cured
• Hearing Impairment
• Locomotor disability
• Mental retardation
• Mental Illness

Authorities which can Issue Certificates under Section 80U

You must be aware of authorities which are eligible for issuing a disability certificate. Hence, you can refer to the following authorities:

• A neurologist with a degree of MD in Neurology
• A civil surgeon working under a government hospital
• A chief Medical Officer working under a Government hospital
• In the case of disabled children, any pediatric neurologist with a degree of MD.

Section 80DD vs Section 80U

According to Section 80DD of the Income Tax Act, the family member or a person’s closest relative can claim a tax deduction. This is applicable to individuals who have paid a specific amount of premium insurance to take care of a disabled person.

Whereas Section 80U provides tax benefits to a person having a disability or severe disability. However, the tax rebate for physically handicapped taxpayers under 80U and 80DD is the same with no change.

Parting Words

Tax deductions are designed to benefit the taxpayers. Section 80U ensures tax benefits to specially-abled people considering their restricted income opportunities and regular medical expenses. This helps them save a good amount of money from their taxable income.

You can also save a significant portion of your taxable income by enrolling in a health plan. The premium paid towards the plan is deductible from your gross income. Hence, this gives you a yearly tax benefit. You can consider buying health policies offered by Niva Bupa, a well-known health insurance provider. It offers a variety of best health insurance plans for individuals and families at affordable prices. You must check out its best health insurance plans to choose the best ones for yourself.

FAQs

1. How is Section 80C different from Section 80U of the Income Tax Act?

Section 80C enables individuals and HUFs to deduct up to ₹1.5 lakh for certain investments such as ELSS, PPF, and life insurance. Section 80U provides lump-sum tax deductions to specially-abled persons having certified disabilities regardless of actual expenditure incurred.

2. Who can avail of a deduction under Section 80U?

Any resident individual with not less than 40% disability, certified by authorized medical officers, may take deductions under Section 80U. The amount of deduction depends upon the level of disability. 

3. Is it possible to claim both Section 80C and Section 80U in one financial year?

Yes, if they are eligible, a person can claim both Section 80C (investment-based deductions) and Section 80U (disability-based fixed deduction) in the same year, thus achieving the maximum possible tax savings.

4. What is the amount of tax deduction that a disabled person can claim under Section 80U?

Under Section 80U, a person with 40% to 79% disability can claim ₹75,000, and a person with 80% or more disability can claim a larger amount of ₹1,25,000 per annum.

5. Who can issue a valid disability certificate for Section 80U claims?

A valid disability certificate can be issued by:

• A neurologist (MD in Neurology)
• A Chief Medical Officer or a civil surgeon at a government hospital
• A paediatric neurologist (in the case of disabled children)