Circular No. 272

950. Employers authorised to give deduction of allowance under section 80U from salary income while deducting tax at source on production of certificate issued by Income-tax Officer

What this is

Circular No. 272 was issued by the Central Board of Direct Taxes on 27 May 1980. Its subject is 950. Employers authorised to give deduction of allowance under section 80U from salary income while deducting tax at source on production of certificate issued by Income-tax Officer.

What it does

Lets an employer give the section 80U deduction of Rs. 5,000 while deducting tax from salary, instead of leaving the employee to claim it only in assessment. The employee applies in the course of his assessment for the first assessment year or later, and on completing that first year's assessment - if he is held entitled to the deduction - the Income-tax Officer issues a certificate in the employer's name. The employer then allows Rs. 5,000 against salary in computing the tax to be deducted. The certificate stays in force until the Income-tax Officer withdraws it or the individual leaves that employer's service.

Why it was issued

To avoid inconvenience to handicapped persons drawing salary, who would otherwise bear the deduction at source and wait for the deduction in assessment.

Who it reaches

Resident salaried employees who are totally blind or permanently physically disabled
Employers deducting tax under section 192
Income-tax Officers issuing the certificate

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.80U	s.154

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

950. Employers authorised to give deduction of allowance under section 80U from salary income while deducting tax at source on production of certificate issued by Income-tax Officer
1. Section 80U authorises deduction of Rs. 5,000 from the income of a resident individual who, at the end of the previous year, is either totally blind or is subject to or suffers from a permanent physical disability (other than blindness) which has the effect of reducing substantially his capacity to engage in a gainful employment or occupation.
2. The deduction of Rs. 5,000 is to be allowed to such a resident individual by the Income-tax Officer on production, in respect of the first assessment year for which deduction is claimed (a) in the case of a totally blind person, a certificate from a registered medical practitioner being an oculist; and (b) in the case of a permanent disabled person, a certificate from a registered medical practitioner as to the permanent physical disability referred to in clause (ii) of section 80U.
3. In order to avoid any inconvenience to such handicapped persons, the Board have been considering the question of authorising the employers to take into account this deduction while working out the tax to be deducted at source in case they derive income assessable under the head "Salaries".
4. It has been decided that an employer would give a deduction of Rs. 5,000 from the income assessable under the head "Salaries" while deducting the tax at source thereon in any financial year on the production of a certificate. Such certificate will be issued by the Income-tax Officer in the name of the employer on a request made by the resident individual entitled to this deduction in the course of his assessment for the first assessment year or later. The certificate will be issued on completing the first year’s assessment if such an individual is held entitled to the deduction of Rs. 5,000 under section 80U.
5. A certificate once issued will continue to be in force till it is withdrawn by the Income-tax Officer or till the resident individual leaves the employment of the employer in whose favour the certificate is issued.
Circular: No. 272 [F. No. 275/16/80-IT(B)], dated 27-5-1980.

What to watch

The employer cannot act on the employee's word alone - only on a certificate issued by the Income-tax Officer in the employer's own name.
The certificate can issue only after the first year's assessment in which the deduction is allowed, so the first year still has full deduction at source.
The certificate dies when the employee changes employer; a fresh one is needed for the new employer.
The Rs. 5,000 figure and the medical certificate requirements are those of section 80U as it then stood, and the section has since been rewritten.

Where you meet it

When an employee asks the employer to give effect to section 80U in monthly TDS, and in a short-deduction proceeding where the employer allowed the deduction without a certificate.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 3/2022 — Specifying forms returns statements reports orders by whatever name called prescribed in appendix ii to be furnished ele 16 July 2022
Circular No. 653 — Section 80DD l Medical Treatment of Handicapped Dependents, ETC 15 June 1993
Notification No. 529E — A notification under section 80U of the Income-tax Act, 1961 17 July 1985
Circular No. 375 — Section 8OU l Totally Blind or Physically Handicapped Persons 2 January 1984
Circular No. 246 — Section 8OU l Totally Blind or Physically Handicapped Persons 20 September 1978

← Circular No. 273 · Circular No. 271 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.