Section 127 of the Income-tax Act, 2025 allows a resident individual or HUF a deduction of ₹75,000 for expenditure on medical treatment, training and rehabilitation of a dependant with a disability, or for a deposit under an approved maintenance scheme, rising to ₹1,25,000 for severe disability.
What section 127 does
Section 127 is the deduction for a dependant with a disability — the successor to section 80DD of the Income-tax Act, 1961. It should not be confused with section 154, which covers the taxpayer's own disability.
The deduction is a flat amount, not a reimbursement of actual expenditure: ₹75,000, rising to ₹1,25,000 under sub-section (3) where the dependant is a person with severe disability. Available to a resident individual or HUF.
There are two alternative qualifying routes. Either the assessee incurred expenditure on medical treatment (including nursing), training and rehabilitation of the dependant; or the assessee paid or deposited under an approved scheme of the LIC, another insurer, the Administrator or the specified company for the dependant's maintenance.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536. Figures quoted here are the amounts written into the Act as enacted (with the Gazette corrigenda of 3 September 2025); the annual Finance Act can change rates and thresholds.
Old Act and new Act, side by side
The table below shows what the Income-tax Act, 1961 did and where the same ground is covered in the Income-tax Act, 2025.
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 80DD(1)(a) | Expenditure on treatment, training and rehabilitation | 127(1)(a) |
| 80DD(1)(b) | Deposit under an approved maintenance scheme | 127(1)(b) |
| 80DD(2) | Conditions for the scheme and nomination | 127(2) |
| 80DD(1), proviso | ₹1,25,000 for severe disability | 127(3) |
| 80DD(3) | Death of the dependant before the subscriber | 127(4) |
| 80U | Deduction for the taxpayer's own disability | 154 |
Section 127 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Sub-section (1) — who qualifies and on what basis
A resident individual or HUF is allowed a deduction of up to ₹75,000 from gross total income where during the year they have (a) incurred expenditure for the medical treatment (including nursing), training and 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, any other insurer, the Administrator or the specified company for the maintenance of such a dependant, subject to the conditions in sub-section (2) and Board approval.
Sub-section (2) — the two conditions on the scheme route
The clause (1)(b) deduction is allowed only if: (a) the scheme provides for payment of an annuity or lump sum for the dependant's benefit on the death of the individual or HUF member in whose name it was subscribed, or on that person attaining sixty years or more where the payments have been discontinued; and (b) the assessee nominates the dependant, or another person or a trust, to receive the payments for the dependant's benefit.
Sub-section (3) — severe disability
If the dependant is a person with severe disability, the deduction of ₹75,000 is substituted with ₹1,25,000. As with section 154, the distinction between disability and severe disability turns on the certificate issued by the medical authority.
Sub-section (4) — if the dependant dies first
Where the dependant with a disability predeceases the individual or the HUF member referred to in sub-section (2), the sub-section sets out the consequences for amounts paid or deposited under the scheme. Read it before assuming the earlier deductions are unaffected.
How it differs from section 154 and section 128
Section 127 is for a dependant's disability and is a flat ₹75,000 or ₹1,25,000. Section 154 is for the taxpayer's own disability, at the same amounts. Section 128 is for medical treatment of specified diseases, at ₹40,000 or ₹1,00,000, and is based on amounts actually paid. The three are distinct and can apply to different people in the same family.
Worked example
A resident individual supports a dependent sibling certified with severe disability, tax year 2026-27.
| Item | Amount spent | Deduction under section 127 |
|---|---|---|
| Medical treatment, nursing and therapy | ₹48,000 | Qualifies under clause (1)(a) |
| Annual deposit under an approved LIC maintenance scheme | ₹60,000 | Qualifies under clause (1)(b), conditions in sub-section (2) met |
| Deduction allowed | Total spent ₹1,08,000 | ₹1,25,000 — the flat amount for severe disability under sub-section (3) |
The point that surprises taxpayers is that the deduction is not limited to what was spent. Having incurred qualifying expenditure or made a qualifying deposit, the assessee gets the full flat amount — ₹1,25,000 here, even though ₹1,08,000 was actually spent.
The same taxpayer could separately claim section 154 for their own disability and section 128 for a specified disease of another family member; the sections operate independently.
Compliance checklist and due dates
- Obtain the disability certificate from the medical authority and check whether it certifies disability or severe disability.
- Where using the scheme route, confirm the scheme meets both conditions in sub-section (2), including the nomination.
- The deduction is flat — do not reduce it to the amount actually spent.
- Confirm the assessee is resident in India; non-residents are outside the section.
- Do not claim section 127 for the taxpayer's own disability — that is section 154.
- Check section 202 before claiming, since the new regime restricts most Chapter VIII deductions.
- Read sub-section (4) where the dependant predeceases the subscriber.
Common mistakes
- Restricting the claim to actual expenditure. The deduction is a flat ₹75,000 or ₹1,25,000.
- Using the scheme route without a valid nomination, which sub-section (2)(b) requires.
- Confusing section 127 with section 154 (own disability) or section 128 (specified diseases).
- Claiming as a non-resident.
- Assuming the certificate never needs renewal; the definitions in section 127 are also used by section 154, which has explicit renewal conditions.
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.