Circular No. 702

515. Whether, as long as conditions mentioned in section 80DD are fulfilled and assessee has incurred any expenditure on medical treatment, etc., of handicapped person, deduction as envisaged in section 80DD will be allowable in full

What this is

Circular No. 702 was issued by the Central Board of Direct Taxes on 3 April 1995. Its subject is 515. Whether, as long as conditions mentioned in section 80DD are fulfilled and assessee has incurred any expenditure on medical treatment, etc., of handicapped person, deduction as envisaged in section 80DD will be allowable in full.

What it does

Clarifies that the section 80DD deduction of Rs. 15,000 for a handicapped dependant is statutory in nature. Once the section's conditions are met and the assessee has incurred any expenditure on medical treatment, nursing, training or rehabilitation of the dependant, the deduction is allowable in full - it is not to be cut down to the amount actually spent. The conditions recited are that the dependant is a relative not dependent on anyone else for support, suffers a certified permanent physical disability including blindness or mental retardation, the disability considerably reduces his capacity for normal work or gainful occupation, and the assessee has incurred expenditure on his treatment, training or rehabilitation.

Why it was issued

Several representations had been received seeking clarification on the quantum of deduction available in relation to expenditure incurred on handicapped dependants.

Who it reaches

Resident individuals and Hindu undivided families maintaining a handicapped dependant
Assessees whose actual spend is less than the section's figure
Assessing Officers restricting the deduction to vouched expenditure

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.80DD	s.127

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.

515. Whether, as long as conditions mentioned in section 80DD are fulfilled and assessee has incurred any expenditure on medical treatment, etc., of handicapped person, deduction as envisaged in section 80DD will be allowable in full
1. Under the provisions of section 80DD of the Income-tax Act, 1961, an assessee who is resident in India being an individual or a Hindu undivided family is allowed a deduction of Rs. 15,000 for expenditure incurred in respect of handicapped dependants subject to the following conditions :—
(i) the handicapped dependant is a relative of the assessee and is not dependant on any person other than the assessee for his support or maintenance;
(ii) he is suffering from a permanent physical disability (including blindness) or mental retardation and the same is certified by a Physician, Psychiatrist, etc., working in Government hospital;
(iii) the disability has the effect of reducing considerably such person’s capacity for normal work or engaging in a gainful employment or occupation;
(iv) the assessee has incurred any expenditure for medical treatment (including nursing), training and rehabilitation of the handicapped dependant.
2. The Board has received several representations seeking clarification regarding the quantum of deduction available in relation to the expenditure incurred on the handicapped dependants.
3. It is hereby clarified that the deduction under section 80DD of the Income-tax Act, 1961 is statutory in nature. Therefore, as long as the conditions mentioned in the section are fulfilled, and the assessee has incurred any expenditure on medical treatment, etc., of the handicapped person, the deduction as envisaged in the section will be allowable in full.
Circular : No. 702, dated 3-4-1995.

What to watch

The certificate must come from a physician, psychiatrist or the like working in a Government hospital.
The dependant must not be dependent on any person other than the assessee - support from another relative defeats the claim.
Some expenditure must actually have been incurred; the deduction is full but not automatic.
Section 80DD has been rewritten since, including the figure of Rs. 15,000 recited here, so the amount speaks only for the section as it then stood.

Where you meet it

When an Assessing Officer restricts an 80DD claim to the bills produced, and when an employer allows the deduction in computing salary TDS.

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
Notification No. 177 — It (Eighteenth Amdt.) Rules, 2005 29 June 2005
Circular No. 775 — 775 dated 26 3 1999 26 March 1999
Circular No. 654 — Financial Year 1993-94 22 July 1993
Circular No. 653 — Section 80DD l Medical Treatment of Handicapped Dependents, ETC 15 June 1993

← Circular No. 703 · Circular No. 700 →

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.