What tax benefits are available for parents of autistic children?
My son is autistic and his UDID card mentions 25% disability. What tax benefits am I eligible for? Is it true that the clubbing provision doesn't apply to special children? Also, how can I set up a trust for his future?
- Name withheld on request.
Since your son is diagnosed with autism, you are entitled to claim a fixed deduction of ₹ 75,000 per year under Section 80DD of the Income Tax Act. This deduction covers expenses related to medical treatment (including nursing), training, and rehabilitation of a dependent with a disability.
Importantly, in the case of autism, the 40% disability threshold does not apply to claim this deduction. You will, however, need a valid medical certificate issued by a neurologist or a civil surgeon/chief medical officer at a government hospital, which must be filed using Form 10IA before filing your income tax return.
If your son's condition is classified as a severe disability (more than 80%), the deduction increases to ₹ 125,000 per year.
As for your second query, yes, you are correct—the clubbing provisions under the Income Tax Act do not apply in the case of a minor child with a disability as defined under Section 80U. Since autism is included in this definition, any income your son earns will not be clubbed with your income. This provides a significant financial planning advantage.
Regarding estate planning, you can consider creating a special needs trust for your son's future. This can be done either:
During your lifetime (an inter vivos trust), or
Through your will (a testamentary trust, which takes effect after your passing).
The trust deed should clearly outline the purpose of the trust, the appointed trustee(s), and how the funds are to be managed and utilised for your son's care. As long as the trust is set up specifically for the benefit of a dependent with a disability, any property or funds received by the trust will be exempt from tax.
The most critical part of this process is identifying a trustworthy and capable trustee who can ensure your child's well-being and financial security over the long term.
Mahesh Nayak, chartered accountant, CNK & Associates.
If you have any personal finance query, write to us at mintmoney@livemint.com to get it answered by experts.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
3 hours ago
- Mint
NRI taxation: How to claim special tax concessions
MUMBAI : Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs) often maintain a financial footprint in India through shares, deposits, or other financial instruments. However, many are unaware of the benefits of the Income Tax Act's sections 115C and 115I, which provide concessional tax treatment on certain incomes. Mint explains who can claim these benefits on which assets and when. The types of income that qualify for concessions The concessions apply to two specific types of income. 'The special tax provisions apply to income from foreign exchange assets such as interest, dividends, etc., or anything derived from specified foreign exchange assets. Long-term capital gains (LTCG) from the sale of foreign exchange assets are also covered," said Hardik Mehta, managing committee member, Bombay Chartered Accountants Society. Also Read: Golden tax window for NRIs: What RNOR means and how to use it However, Laxmi Ahirwar, director at chartered accountant firm P.R. Bhuta & Co, clarified that NRIs can not claim any deduction under Chapter VI-A (sections 80C to 80U), adding that even the indexation benefit on LTCG is not available. Foreign exchange assets The definition of a foreign exchange asset is strictly linked to the source of funds. 'Specific assets acquired or purchased with, or subscribed, using convertible foreign exchange are classified as foreign exchange assets. These are: shares in a private or public limited Indian company, debentures issued by a public limited Indian company, deposits with a public limited Indian company, any security issued by the central government, or any other security that the central government may specify by issuing a notification," explained Ahirwar. Mehta added: 'When you transfer US dollars from your foreign bank account to your non-resident external (NRE) account, these funds are initially converted into INR before being deposited into the NRE account. Consequently, if equity shares are bought utilising funds from the NRE account, they are considered as foreign exchange assets. However, if the same shares are acquired using domestic funds from the non-resident ordinary (NRO) account, they will not qualify for the preferential tax rate under the special tax provisions." Funds transferred from NRO to NRE According to Ahirwar, funds routed through NRE accounts are generally eligible for concessional tax treatment under sections 115C to 115I of the Income Tax Act, provided the investment is made using foreign exchange remitted into India. In contrast, investments made using funds from NRO accounts are not eligible, as these typically consist of income earned or accumulated within India. A frequent point of confusion arises when funds are transferred from an NRO to an NRE account using Forms 15CA and 15CB, a process permitted under the Foreign Exchange Management Act (FEMA). However, Ahirwar clarified that simply moving funds in this manner does not automatically qualify them for tax concessions. The key factor remains the original source of the money—it must have been inwardly remitted in convertible foreign exchange, not generated or retained domestically. 'This area is often subject to litigation," Ahirwar noted, 'as tax authorities may ask for proof that the investment was made from genuine foreign exchange inflows and not converted from Indian income." Even if the funds sit in an NRE account, the origin trail must be clearly established. Also Read: Do NRIs have to pay tax on mutual fund gains in India? Ahirwar added that case laws have consistently emphasized that the source of funds takes precedence over the type of bank account used. Therefore, taxpayers must maintain proper documentation, such as bank remittance advice or foreign inward remittance certificates, to demonstrate compliance and claim concessional tax treatment with confidence. Under Section 115E, the tax rates are fixed and applied on a gross basis. Mehta shared that 'as per Section 115E, the special tax rate on investment income is 20% and on LTCG 12.5%. The above taxation is on a gross basis, and no deductions or indexation benefits are available to the assessee. For those reinvesting their LTCG, Mehta added, 'LTCG is exempted from tax if net consideration is invested within six months from the date of sale in another foreign exchange asset or a savings certificate." If the price of a new foreign exchange asset is less than the net sale consideration, the exemption would be computed proportionately. A three-year lock-in would be applicable to the new foreign exchange asset purchased. 'If the new asset is transferred or sold within three years of purchase, then the exemption claimed earlier will be taxable in the year in which the new asset was transferred or sold," he explained further. For example, Mr A sells shares that qualify as foreign exchange assets for ₹10 lakh and earns LTCG of ₹2 lakh on the sale. Per Section 115E, this LTCG would typically be taxed at 12.5% on a gross basis. However, if the NRI reinvests the entire net sale proceeds within six months in any specified asset or any other assets as the central government may specify, the LTCG can be exempted from tax. But Mr A reinvests only ₹8 lakh out of the ₹10 lakh net sale consideration into a specified asset. Because the reinvestment is less than the net sale consideration, the exemption on the LTCG will be computed proportionately. This means the exempted LTCG will be calculated as (LTCG/net sale consideration) multiplied by the amount reinvested. In this case, ( ₹2 lakh/ ₹10 lakh × ₹8 lakh) ₹1.6 lakh would be exempt from tax. The remaining ₹40,000 would be taxable. Furthermore, the new foreign exchange asset bought with the reinvested amount will have a mandatory lock-in period of three years. If the NRI sells or transfers this new asset before the completion of three years, the earlier exemption claimed on the LTCG will be reversed and taxed in the year of such transfer or sale. This rule ensures that the reinvestment is maintained for a minimum period to qualify for the exemption. Continuous tax exemption Even after the initial three-year lock-in period, NRIs can continue to enjoy exemptions on LTCG, provided the proceeds from the sale are reinvested into eligible foreign exchange assets within the stipulated time. 'The tax exemption on LTCG doesn't have to be a one-time benefit," said Gautam Nayak, a chartered accountant. 'If the sale proceeds are reinvested into qualifying assets within six months, and those assets are held for the required period, the exemption can be carried forward indefinitely with each reinvestment cycle." This reinvestment must occur within six months of the sale of specified assets. Nayak explained that maintaining a proper documentary trail is critical in such cases. 'NRIs must be able to demonstrate that the original investment was made using convertible foreign exchange and that each subsequent reinvestment complied with the conditions specified under the Income Tax Act." Without clear proof of the source of funds and asset eligibility, claims for exemption may not hold up during assessment or scrutiny. For example, an NRI invests ₹20 lakh in shares using funds from their NRE account. After one year, the investment grows to ₹40 lakh. To claim the capital gains exemption, the entire ₹40 lakh must be reinvested within six months into another qualifying foreign exchange asset. After holding the new asset for the required three years, if its value increases to ₹60 lakh and is sold again, the exemption can still be preserved, provided the ₹60 lakh is reinvested once more into an eligible asset within six months. This cycle of reinvestment and exemption can continue as long as the NRI complies with the reinvestment timeline, asset eligibility, and documentation requirements. Even after an NRI returns to India and becomes a resident, they may continue to enjoy these concessions under certain conditions. 'NRIs returning to India can continue being governed under these special provisions for their investment income (except interest, dividend income on shares in an Indian company) by furnishing a declaration to the assessing officer, along with their income tax return (ITR)," Mehta explained. Also Read: EPF nightmare for NRIs: Service gaps, missing UANs, and frozen funds 'If an NRI becomes a resident in India in any subsequent year, he may submit a return of income along with a written declaration to the assessing officer stating that the special tax provisions should continue to apply to their investment income from foreign exchange assets," Ahirwar added.
India.com
6 hours ago
- India.com
How To Revive A Discontinued PPF Account: Reasons, Resolutions Explained
photoDetails english 2911742 Updated:Jun 06, 2025, 09:47 AM IST Public Provident Fund Withdrawal 1 / 8 Public Provident Fund (PPF) is a 15-year investment scheme under which an investor enjoys tax exemption at the time of deposit, accrual of interest and withdrawal. PPF Scheme Interest Rate 2 / 8 The PPF Scheme, introduced by the National Savings Organization in 1968 was aimed at making small savings a lucrative investment option. PPF currently offers an interest rate of 7.1 percent. PPF account lock-in period 3 / 8 Though PPF has a lock-in period of 15 years, you can make extension in a block of 5 years for tenures upto 20, 25 and 30 years. Steps to revive discontinued PPF account 4 / 8 However, for specific reasons, mentioned below, your PPF account can also be discontinued. We have also discussed how you can revive a discontinued PPF account. Here is how your PPF account shall become discontinued 5 / 8 In any financial year, if you have not made minimum deposit of Rs 500, then your PPF account shall become discontinued. It may also be noted that loan or withdrawal facility is not available on discontinued PPF accounts. Here is how to revive a discontinued PPF account 6 / 8 Discontinued account can be revived by the depositor before maturity of the account. The account holder must deposit minimum subscription fee i.e. Rs 500 plus Rs 50 as default fee for each defaulted year. Deposit for discontinued PPF account 7 / 8 The total deposit in a year, shall be inclusive of deposits made in respect of years of default of previous financial years. Minimum and maximum deposit for PPF account 8 / 8 A minimum of Rs 500 and a maximum of Rs 1.5 lakh per annum can be deposited every year in a PPF account at present. Deposits can be done maximum in 12 transactions. However, you must note that if you deposit more than Rs1.5 lakh in your PPF account per annum, the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act.
Time of India
2 days ago
- Time of India
Pragmatism or pullout? State asks local bodies to mobilise donations
Thiruvananthapuram: The state govt's instruction to local self-govt (LSG) institutions to systematically mobilise public donations and sponsorships to fund development activities has gained attention, with doubts raised about whether the "financially pragmatic" move signalled further withdrawal of state support in key development areas. In a detailed circular dated June 2, the LSG department directed local bodies to formulate a "comprehensive strategy" for raising voluntary contributions and sponsorships from individuals, non-profit organisations, corporate entities under CSR, and other sources to "increase the scope of development activities and accelerate the pace of local development." Faced with a persisting financial crunch, the govt had halved its Plan size in the last financial year, significantly cutting down on many schemes. Finance minister K N Balagopal told reporters on Wednesday that the govt always welcomed public donations and nothing more needed to be seen in the circular. He also refuted charges that the performance audit of local bodies would be solely based on such donations. The circular specifies that the performance of local bodies in donation mobilisation and utilisation will be included as a metric in their annual evaluation, and innovative models may be documented by KILA (Kerala Institute of Local Administration) and showcased for replication. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 【adidas官網限定】Mega Summer 超級降價 adidas 香港官方網上商店 立即選購 Undo Noting that many public assets — including schools, hospitals, libraries, anganwadis, markets and even roads — were built with people's donations over the years, it asks local bodies to chart out a plan at the beginning of their tenure for collecting contributions for schools, hospitals, drinking water facilities, roads, playgrounds and welfare institutions. It also suggested tapping alumni networks, PTA committees, CSR arms of businesses, and even youth-led voluntary labour. The govt has also prescribed detailed compliance measures to avoid misuse. Donations must be received directly by the LSG institution, and a proper receipt must be issued. The funds must be credited under a designated budget head, and all details, including donor names and intended usage, must be published both in gram sabhas and on the official websites. It should also be ensured that donations collected for a specific purpose are used only for that purpose, the circular said. It also warns that only legally compliant donations may be accepted — including compliance with the Income Tax Act and the FCRA (though foreign donations aren't in question here).
