5% GST on Assistive Devices & Tax Benefits for PWDs 2026

What Happened?

In August 2026, the Government has announced a significant tax relief measure by fixing a concessional 5% Goods and Services Tax (GST) on specified assistive devices meant for Persons with Disabilities (PWDs). Alongside this, the Income Tax authorities have detailed the tax deduction provisions available to PWDs under the Income Tax Act 2025. Additionally, new guidelines from the Insurance Regulatory and Development Authority (IRDAI) mandate specific insurance coverage requirements for PWDs purchasing these devices.

Background & Legal Context

The Income Tax Act 2025 has introduced several provisions to support PWDs, building upon earlier frameworks. These include:

• Section 80U of Income Tax Act 2025: This section provides a deduction of up to ₹75,000 for PWDs for medical treatment, including purchase of assistive devices, hearing aids, wheelchairs, orthotic devices, and other prescribed equipment. This applies to AY 2025-26 and AY 2026-27 onwards.
• Section 80DD of Income Tax Act 2025: For individuals who maintain a dependent PWD, this section allows a deduction of up to ₹75,000 (or ₹1,25,000 for severe disability). This is separate from Section 80U.
• GST Council Decision (August 2026): The GST Council has rationalized the tax treatment by placing assistive devices in the 5% GST slab instead of the earlier higher rates. This includes devices like wheelchairs, hearing aids, prosthetic limbs, speech-generating devices, and Braille materials.
• IRDAI Circular (August 2026): Insurance companies must offer dedicated health and disability insurance products for PWDs with transparent premium structures and coverage for assistive device purchases.

These provisions recognize that PWDs face higher medical and mobility costs, and the tax system should provide relief rather than impose additional burden.

What Does This Mean for You?

For Persons with Disabilities (Taxpayers):

• Lower GST on Purchases: When you purchase assistive devices such as wheelchairs, hearing aids, walkers, crutches, or prosthetic devices, you will now pay only 5% GST instead of higher rates (previously 12% or 18% on some items). This reduces your out-of-pocket expense significantly. For example, a wheelchair costing ₹50,000 with 12% GST would cost ₹56,000; at 5% GST, it costs ₹52,500—a saving of ₹3,500.
• Income Tax Deduction: Under Section 80U of the Income Tax Act 2025, you can claim a deduction of up to ₹75,000 in a financial year for expenses incurred on assistive devices, medical treatment, and rehabilitation. This reduces your taxable income. For instance, if you earned ₹6,00,000 in AY 2026-27 and spent ₹75,000 on a hearing aid and physiotherapy, your taxable income becomes ₹5,25,000. The tax saving at 20% slab is ₹15,000.
• Documentation Required: You must maintain receipts and invoices showing the assistive device purchase. GST invoices will clearly show the 5% rate. Ensure the vendor provides a proper tax invoice mentioning the device specifications and GST classification.
• No Double Benefit: You cannot claim the same expense both under Section 80U (income tax deduction) and seek reimbursement from health insurance simultaneously. Choose the option that gives maximum benefit.

For Parents/Guardians of Dependent PWDs:

• Section 80DD Benefit: If you have a dependent son, daughter, or relative with disability, you can claim deductions up to ₹75,000 (or ₹1,25,000 for severe disabilities) under Section 80DD. This applies to expenses on assistive devices, education, medical treatment, and attendant care.
• Medical Certificate: You must obtain a medical certificate from a registered medical practitioner confirming the disability and its extent (mild/moderate/severe). This certificate supports your tax claim.

For Business Suppliers of Assistive Devices:

• Lower Tax Compliance: If you are a registered GST dealer selling assistive devices, the 5% rate reduces your compliance burden and makes pricing competitive. You collect 5% GST from customers and remit it to the Government.
• Input Tax Credit (ITC): You can claim input tax credit on the raw materials and components you purchase to manufacture or assemble assistive devices, subject to normal GST ITC rules.
• HSN Code Classification: Ensure you classify products correctly under the relevant HSN codes as notified by the GST Council for 5% rate applicability. Misclassification invites GST penalties.

What Should You Do Now?

Immediate Actions for PWDs (AY 2026-27):

• Step 1: If you plan to purchase an assistive device, ask vendors to issue GST invoices showing the 5% rate. Avoid unregistered vendors who cannot provide GST receipts.
• Step 2: Compile all invoices and receipts of assistive device purchases made in the financial year 2026-27 (April 2026 to March 2027).
• Step 3: Obtain a disability medical certificate (if you don't have one) from a registered medical practitioner. This is essential for claiming Section 80U or Section 80DD deduction in your ITR.
• Step 4: Calculate your total eligible expenses. If expenses exceed ₹75,000, only ₹75,000 is deductible under Section 80U. Maintain a file with supporting documents.
• Step 5: When filing your Income Tax Return (ITR) for AY 2026-27 (due by July 31, 2027), claim the deduction under Section 80U with supporting documents attached.

For Parents/Guardians (AY 2026-27):

• Step 1: Maintain separate records of all expenses incurred on the dependent PWD—assistive devices, medical treatment, education, attendant fees, etc.
• Step 2: Ensure the dependent is registered as a PWD with appropriate medical certification. Update the disability certificate if expired.
• Step 3: In your ITR, declare the dependent relationship and attach medical certificates supporting the disability claim.
• Step 4: Claim the deduction under Section 80DD (up to ₹75,000 for ordinary disability, ₹1,25,000 for severe disability).

For Businesses Supplying These Devices:

• Step 1: Review your product portfolio and correctly classify items under 5% GST slabs as per GST Council notification (August 2026).
• Step 2: Update your billing system to auto-generate invoices showing 5% GST for qualifying assistive devices.
• Step 3: Train your accounts team on correct HSN code classification to avoid GST disputes.
• Step 4: Ensure all customer invoices contain mandatory GST details: GSTIN, HSN code, device description, and 5% tax amount.

Key Takeaways

• 5% GST on Assistive Devices (August 2026): The Government has rationalized GST rates to 5% for specified assistive devices, significantly lowering the cost for PWDs. This includes wheelchairs, hearing aids, prosthetics, and Braille materials.
• Section 80U Deduction: PWDs can claim up to ₹75,000 deduction under Section 80U of Income Tax Act 2025 for assistive device purchases and related medical expenses in AY 2026-27.
• Section 80DD for Dependents: Parents/guardians of dependent PWDs can claim up to ₹75,000 (₹1,25,000 for severe disability) deduction under Section 80DD, separate from the PWD's own deduction.
• Documentation is Critical: Maintain GST invoices, disability certificates, and itemized receipts. These are essential when filing ITR and during GST audits. Incorrect documentation can lead to penalty or claim rejection.
• IRDAI Insurance Requirement: Insurance companies must now offer dedicated disability insurance products. PWDs should explore these policies to cover assistive device purchases and medical emergencies, as insurance reimbursements can reduce out-of-pocket tax deduction claims.

Important Note: The benefit of Section 80U and Section 80DD applies to residents of India for assessment purposes. Non-resident Indians (NRIs) cannot claim these deductions. Also, the deduction must be claimed in the year the expense is actually incurred, not when payment is made (for cash-basis taxpayers, the rule varies—consult a CA for clarity).

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