Section 127 of the Income-tax Act, 2025 — Deduction for Maintenance of a Dependant with Disability (old 80DD)

In plain language

What Section 127 of the Income-tax Act, 2025 is about

Section 127 gives a fixed deduction to a taxpayer who spends on the medical treatment, training, rehabilitation or long-term maintenance of a family member who has a disability. It is the re-numbered version of the old Section 80DD of the Income-tax Act, 1961. The words, limits and conditions are substantially the same — only the section number has changed. It applies from 1 April 2026 under the 2025 Act.

The key idea: this deduction is for the caregiver, not for the disabled person. If the disabled person claims a deduction for their own disability (Section 128, the old 80U), then the same person cannot be claimed again under Section 127. You choose one, not both, for the same individual.

Who can claim it

• Resident individuals and resident Hindu Undivided Families (HUFs) only.
• Non-residents cannot claim this deduction, even if they support a disabled dependant in India.
• Companies, firms and LLPs are not eligible — it is a personal-taxpayer benefit.

Who counts as a "dependant"

The dependant must be wholly or mainly dependent on the taxpayer for support and maintenance, and must not have claimed a deduction under Section 128 (80U) for the same disability. A dependant means:

• For an individual: spouse, children, parents, brothers and sisters.
• For an HUF: any member of the family.

How much you can deduct

The deduction is a flat, fixed amount — it does not depend on how much you actually spent. Even if you spent far less than the limit, you still get the full amount; and if you spent much more, you are capped at the limit.

• ₹75,000 where the dependant has a disability of 40% or more but less than 80%.
• ₹1,25,000 where the dependant has a severe disability of 80% or more (one or more disabilities).

What expenses qualify

• Medical treatment (including nursing), training and rehabilitation of the disabled dependant; and/or
• Amounts paid or deposited under a scheme of the LIC, any other insurer or a specified company for the maintenance of the dependant. The scheme must pay an annuity or lump sum to the dependant on the death of the taxpayer, or once the taxpayer turns 60 and stops contributing. The disabled dependant must be the nominee.

Important conditions and documentation

• You must furnish a medical certificate from the prescribed medical authority (commonly filed via Form 10-IA) certifying the disability, along with your return.
• If the certificate states a reassessment date, you must renew it once it expires to keep claiming the deduction.
• Clawback rule: if the dependant dies before the taxpayer, the amount paid into the scheme that is returned to the taxpayer becomes taxable income in the year it is received.

Which tax regime — old vs new

This is critical. The deduction under Section 127 is a Chapter VI-A style deduction and is available only under the old tax regime. Under the default new regime (Section 202, the old 115BAC), this deduction is not allowed. To claim it, an eligible taxpayer with business income must opt out of the new regime using Form 10-IEA; salaried and other non-business taxpayers can choose the old regime in the return itself.

How it interacts with related sections

• Section 128 (old 80U): for the disabled person's own claim — cannot overlap with Section 127 for the same person.
• Section 126 (old 80DDB): deduction for actual expenditure on treatment of specified diseases — separate and can co-exist.
• Section 123 (old 80D): health insurance premium — separate deduction.

Practical tip: because the amount is fixed regardless of spend, keep the medical certificate valid and renewed — that single document, not your bills, is what protects the claim during scrutiny.