Section 127 — Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability. Successor to s.80DD of the 1961 Act.
Section 127 is in Chapter VIII — Deductions to Be Made in Computing Total Income, which runs from section 122 to section 154.
Sub-section (1) allows a resident individual or Hindu undivided family a deduction of up to Rs. 75000 from gross total income if during the tax year the assessee has either incurred expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant being a person with disability, or paid or deposited an amount under a scheme framed by the Life Insurance Corporation, any other insurer, the Administrator or the specified company for the maintenance of such a dependant, on the conditions in sub-section (2) and approved by the Board.
Sub-section (2) sets the conditions for the deposit limb: the scheme must pay an annuity or lump sum for the dependant's benefit either on the death of the individual or member in whose name it was subscribed, or on that person attaining sixty years or more where payment or deposit has been discontinued; and the assessee must nominate the dependant, or another person or a trust, to receive the payments for the dependant's benefit.
Sub-section (3) substitutes Rs. 125000 for Rs. 75000 where the dependant is a person with severe disability. Sub-section (4) is the clawback: if the dependant dies before the individual or member, the amount paid or deposited under sub-section (1)(b) is deemed income of the tax year in which it is received. Sub-section (5) disapplies that clawback to amounts received by the dependant before his death by application of the sixty-year condition.
Sub-section (6) requires a copy of the medical certificate issued by the medical authority, in the prescribed form and manner, to be furnished with the return under section 263 for the year of the claim. Sub-section (7) provides that where the certificate specifies reassessment after a stipulated period, the deduction is not allowed for any tax year succeeding the year in which it expires unless a new certificate is obtained and a copy submitted with the section 263 return. Sub-section (8) excludes from "dependant" a person who has claimed a deduction under section 154 for the tax year. Sub-section (9) defines Administrator, dependant, disability, Life Insurance Corporation, medical authority, person with disability, person with severe disability and specified company by reference to the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002, the Persons with Disabilities Act, 1995, the National Trust Act, 1999 and the Life Insurance Corporation Act, 1956.
The cost of maintaining a dependant with a disability falls on the family regardless of what it earns, and the section gives a fixed deduction rather than requiring the expenditure to be proved rupee by rupee. The deposit limb addresses the harder problem — what happens to the dependant afterwards — which is why the scheme must pay out on death or on the subscriber turning sixty with contributions discontinued, and why the deduction is taken back if the dependant predeceases the subscriber.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Deduction from gross total income | Up to Rs. 75000 | Resident individual or Hindu undivided family that has incurred expenditure under clause (a) or paid or deposited under clause (b) for a dependant being a person with disability | Sub-section (1) |
| Substituted deduction for a severe disability | Rs. 125000 | Substituted for Rs. 75000 where the dependant is a person with severe disability as defined in sub-section (9)(g) | Sub-section (3) |
| Degree of disability that is "severe" | 80% or more of one or more disabilities | As referred to in section 56(4) of the Persons with Disabilities Act, 1995; alternatively a person with severe disability under section 2(o) of the National Trust Act, 1999 | Sub-section (9)(g)(i) and (ii) |
| Age at which the scheme may pay out during the subscriber's lifetime | Sixty years or more | The individual or member must attain that age and the payment or deposit to the scheme must have been discontinued | Sub-section (2)(a)(ii) |
The amount is a fixed deduction, not a reimbursement — it is triggered by having incurred expenditure or made a deposit in the year and does not scale with the sum spent, and Rs. 125000 replaces Rs. 75000 outright rather than being added to it. Two paperwork conditions decide most claims: the certificate must go in with the section 263 return, and where the certificate itself says the disability is to be reassessed, sub-section (7) stops the deduction for every year succeeding its expiry until a fresh one is filed. Sub-section (8) prevents the same disability being used twice. The clawback in sub-section (4) reaches only amounts under clause (b), not treatment expenditure under clause (a).
A resident individual deposits Rs. 40000 in the year under an approved insurer's scheme for his dependent brother, who has a certified disability, and spends Rs. 15000 on treatment. The deduction is Rs. 75000, not Rs. 55000, because sub-section (1) gives a fixed amount once either limb is satisfied; had the brother a severe disability, Rs. 125000 would be substituted. If the brother dies first, the amounts deposited under clause (b) become the individual's income of the year in which they are received.
You meet this section in the deductions schedule of the return under section 263, where the claim is made and the copy of the medical certificate is furnished under sub-section (6). It comes up again as a disallowance where the certificate has expired without renewal, or where the dependant has separately claimed under section 154.
shall be allowed a deduction up to Rs. 75000 from his gross total income of a tax year
the amount of deduction as referred to in sub-section (1) shall be substituted with "Rs. 125000" for "Rs. 75000"
the deduction under this section shall not be allowed for any tax year succeeding the tax year in which the said certificate expires
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the circulars index.
See the notifications index.