Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability
[Section-127 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 127(1) of Income Tax Act 2025
127(1) An assessee being an individual or a Hindu undivided family, who is a resident in India, shall be allowed a deduction up to seventy-five thousand rupees from his gross total income of a tax year, subject to the provisions of this section, if during that year he has––
- (a) incurred expenditure for the medical treatment (including nursing), training, or rehabilitation of a dependant, being a person with disability; or
- (b) paid or deposited any amount, under a scheme framed by the Life Insurance Corporation or any other insurer or the Administrator, or the specified company, for the maintenance of a dependant, being a person with disability, subject to the conditions specified in sub-section (2) and approved by the Board in this behalf.
Section 127(2) of Income Tax Act 2025
127(2) The deduction under sub-section (1)(b) shall be allowed only if the following conditions are fulfilled:––
- (a) the scheme referred to in sub-section (1)(b) provides for payment of an annuity or lump sum amount for the benefit of a dependant, being a person with disability––
- (i) on the death of the individual or the member of the Hindu undivided family, in whose name the scheme was subscribed; or
- (ii) on attaining the age of sixty years or more by such individual or the member of the Hindu undivided family, and the payment or deposit to such scheme has been discontinued;
- (b) the assessee nominates the dependant, being a person with disability or another person or a trust to receive the payments on behalf and for the benefit of such dependant.
Section 127(3) of Income Tax Act 2025
127(3) If the dependant as referred to in sub-section (1) is a person with severe disability, the amount of deduction as referred to in sub-section (1) shall be substituted with one lakh and twenty-five thousand rupees for seventy-five thousand rupees.
Section 127(4) of Income Tax Act 2025
127(4) In the event of death of the dependant, being a person with disability before the individual or member of the Hindu undivided family mentioned in sub-section (2), the amount paid or deposited under sub-section (1)(b) shall be deemed to be the income of the assessee of the tax year in which it is received and shall accordingly be chargeable to tax.
Section 127(5) of Income Tax Act 2025
127(5) The provisions of sub-section (4) shall not apply to the amount received by the dependant, being a person with disability, before his death, as an annuity or lump sum, by application of the condition referred to in sub-section (2)(a)(ii).
Section 127(6) of Income Tax Act 2025
127(6) The assessee claiming deduction under this section, shall furnish a copy of the medical certificate issued by the medical authority in such form and manner as prescribed, along with the return of income under section 263 for the tax year in which the deduction is claimed.
Section 127(7) of Income Tax Act 2025
127(7) If the certificate referred to in sub-section (6), specifies that the condition of disability requires reassessment of its extent after a period stipulated in it, the deduction under this section shall not be allowed for any tax year succeeding the tax year in which the said certificate expires, unless a new certificate is obtained from the medical authority in such form and manner, as prescribed, and a copy thereof is submitted along with the return of income under section 263.
Section 127(8) of Income Tax Act 2025
127(8) The dependant mentioned in this section shall not include a person who has claimed deduction under section 154 in computing his total income for the tax year.
Section 127(9) of Income Tax Act 2025
127(9) In this sections,—
- (a) “Administrator” means the Administrator as referred to in section 2(a) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002;
- (b) “dependant” means—
- (i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;
- (ii) in the case of a Hindu undivided family, a member of the Hindu undivided family,
- dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance;
- (c) “disability” shall have the same meaning as assigned to it in section 2(i) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 and includes “autism”, “cerebral palsy” and “multiple disability” respectively referred to in section 2(a), (c) and (h) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;
- (d) “Life Insurance Corporation” means the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956;
- (e) “medical authority” means the medical authority as referred to in section 2(p) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or such other medical authority as may, by notification, be specified by the Central Government for certifying “autism”, “cerebral palsy”, “multiple disabilities”, “person with disability” and “severe disability” respectively referred to in section 2(a), (c), (h), (j) and (o) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;
- (f) “person with disability” means a person as referred to in section 2(t) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or section 2(j) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;
- (g) “person with severe disability” means—
- (i) a person with 80% or more of one or more disabilities, as referred to in section 56(4) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995; or
- (ii) a person with severe disability referred to in section 2(o) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;
- (h) “specified company” shall have the same meaning as assigned to it in section 2(h) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.
FAQs on Section 127 of Income Tax Act 2025
Who is eligible to claim deduction under Section 127?
An individual or Hindu Undivided Family (HUF), who is a resident in India, is eligible to claim deduction under this section.
What is the amount of deduction allowed under Section 127(1)?
The deduction allowed is up to ₹75,000 from gross total income for the tax year.
What are the eligible expenses for claiming deduction under Section 127(1)?
Expenses incurred for medical treatment (including nursing), training, or rehabilitation of a dependant with disability; or amounts paid/deposited under a specified scheme for their maintenance.
Can deduction be claimed if the amount is deposited under an insurance or other approved scheme?
Yes, provided the scheme is framed by LIC or any other insurer, the Administrator, or specified company and is approved by the Board.
What are the conditions for claiming deduction for deposits made under a scheme (Section 127(2))?
The scheme must provide for payment of an annuity or lump sum to the dependant upon:
(i) death of the subscriber, or
(ii) the subscriber attaining 60 years and discontinuing payments;
Also, the dependant or another person/trust must be nominated to receive the benefits.
What is the deduction amount if the dependant has severe disability?
If the dependant has severe disability, the deduction amount is increased to ₹1,25,000 instead of ₹75,000.
Is the deduction taxable if the dependant dies before the assessee?
Yes, under Section 127(4), any amount paid/deposited under a scheme is deemed to be the income of the assessee in the year of receipt if the dependant dies before them.
What if the dependant receives the amount before death due to the subscriber attaining 60 years and stopping deposits?
In such case, per Section 127(5), the amount is not deemed to be income of the assessee.
Is a medical certificate mandatory for claiming deduction?
Yes, a medical certificate from a specified medical authority must be furnished along with the return of income.
What happens if the medical certificate specifies reassessment after a time period?
Deduction cannot be claimed in subsequent years unless a fresh certificate is obtained and submitted.
Can a person who claims deduction under Section 154 also be treated as a dependant for Section 127?
No, such a person is excluded from the definition of “dependant” for this section.
Who qualifies as a ‘dependant’ under Section 127?
For an individual: spouse, children, parents, brothers or sisters who are wholly or mainly dependent.
For a HUF: any member who is wholly or mainly dependent.
What is the meaning of ‘disability’ for the purposes of Section 127?
It refers to the definition under the Persons with Disabilities Act, 1995 and includes autism, cerebral palsy, and multiple disabilities as per the National Trust Act, 1999.
Who is considered a ‘person with severe disability’?
A person having 80% or more of one or more disabilities or defined as severely disabled under the relevant Acts.
What is meant by ‘medical authority’?
It refers to the authority under the Persons with Disabilities Act or other authorities notified by the Central Government for certifying relevant disabilities.
What is a ‘specified company’ under this section?
It has the same meaning as assigned under section 2(h) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.
Is the deduction available to non-residents?
No, only residents in India are eligible to claim this deduction.
Is there any age limit for the dependant to qualify for deduction?
No specific age limit is prescribed for the dependant under Section 127.
Can both expenditure on treatment and deposit under a scheme be claimed in the same year?
Yes, both can be claimed together, but the total deduction is limited to ₹75,000 or ₹1,25,000, as applicable.
Does the deduction under Section 127 apply automatically?
No, it must be claimed in the return of income and supported by required documents including the medical certificate.
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