While the Covid-19 outbreak has presented unprecedented challenges to society as a whole, it has had a disproportionate impact on differently-abled persons who are more vulnerable to the disease due to their physical, sensory, and cognitive limitations.
To ensure the financial security of differently-abled dependents, the finance minister proposed a new tax benefit for the parent/guardian of a differently-abled person to be added under Section 80DD of the Income Tax Act. Earlier, deduction from Gross Income before Tax was allowed to the parent/guardian, the subscriber of insurance policy, where the differently-abled person, the beneficiary, would get the lump-sum payment or annuity only in case of the death of the subscriber of the policy.
As per the new tax reforms, if the parent/guardian of a differently-abled person purchases an insurance policy with the latter as the beneficiary then, the parent/guardian will be eligible for tax deductions even in cases where the payment of the annuity or lump sum amount from insurance schemes to the beneficiary begin during the lifetime of the subscriber of the policy, i.e., on parents/guardian attaining the age of 60 years.
This article was authored by Bhavya Tyagi.