Section 154 of the Income-tax Act, 2025 allows a resident individual certified as a person with disability a flat deduction of ₹75,000, or ₹1,25,000 for severe disability. The certificate must be furnished with the return and renewed when it expires.
What section 154 does
Section 154 carries forward section 80U of the Income-tax Act, 1961. It is a flat deduction — it does not depend on what you actually spent, and no bills are required.
The amounts are ₹75,000 for a person with disability and ₹1,25,000 for a person with severe disability. The assessee must be an individual resident in India, certified by a medical authority at any time during the tax year.
Do not confuse this with section 127. Section 154 is for the taxpayer's own disability; section 127 — the successor to section 80DD — is for maintenance and medical treatment of a dependant with a disability. Section 154(3) borrows its definitions from section 127.
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 |
|---|---|---|
| 80U(1) | ₹75,000 for disability, ₹1,25,000 for severe disability | 154(1) |
| 80U(2) | Certificate from a medical authority | 154(2)(a) |
| 80U(2), proviso | Renewal after the certificate expires | 154(2)(b) |
| 80U(2), second proviso | Certificate to be furnished with the return | 154(2)(c) |
| 80DD | Deduction for a dependant with disability | 127 |
| 80U, Explanation | Definitions of disability and medical authority | 154(3) with 127 |
Section 154 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 how much
An individual resident in India who is certified by a medical authority at any time during the tax year as a person with disability or a person with severe disability is allowed a deduction of ₹75,000 or ₹1,25,000 respectively. Certification at any point in the year is enough; it need not be held throughout.
Sub-section (2)(a) — furnish the certificate
The deduction is allowed only if the individual furnishes a copy of the certificate issued by the medical authority. This is a condition of the deduction, not merely evidence to be produced on demand.
Sub-section (2)(b) — renewing an expiring certificate
Where the certificate specifies that the disability needs reassessment after a stipulated period, the deduction is not allowed for any tax year succeeding the year in which the certificate expires, unless a new certificate is obtained and furnished. A lapsed certificate quietly ends the deduction.
Sub-section (2)(c) — the filing requirement
The certificate must be furnished in the prescribed form and manner, along with the return of income under section 263 for the tax year in which the deduction is claimed. Combined with section 122(5), this means the return must also be filed on time and the claim made in it.
Sub-section (3) — the definitions come from section 127
Disability, medical authority, person with disability and person with severe disability have the same meanings as in section 127 — the provision dealing with a dependant with a disability. The two sections therefore share a single set of definitions but serve different claimants.
Worked example
Three situations in tax year 2026-27.
| Situation | Deduction under section 154 |
|---|---|
| A resident individual certified as a person with disability in September 2026 | ₹75,000 — certification at any time during the year suffices |
| A resident individual certified with severe disability, certificate furnished with the return | ₹1,25,000 |
| A certificate valid to March 2026 requiring reassessment; no new certificate obtained | Nil for 2026-27 — sub-section (2)(b) |
| A non-resident individual with a disability | Nil — sub-section (1) requires residence in India |
| A resident claiming for a dependent child's disability | Nil under section 154 — that claim belongs under section 127 |
The third row is the most common way this deduction is lost. The certificate did not have to be renewed during the year it was valid, but once it expired without reassessment, the deduction stops for every succeeding year until a fresh certificate is obtained and furnished.
Compliance checklist and due dates
- Confirm the individual is resident in India — non-residents are outside section 154.
- Obtain the certificate from a medical authority as defined in section 127.
- Check whether the certificate stipulates a reassessment period, and diarise its expiry.
- Furnish the certificate in the prescribed form along with the return under section 263.
- Claim ₹75,000 or ₹1,25,000 as applicable; no expenditure proof is needed since the deduction is flat.
- For a dependant's disability, claim under section 127, not section 154.
- Check section 202 before claiming, since the new regime restricts most Chapter VIII deductions.
Common mistakes
- Letting a certificate with a reassessment date lapse, which ends the deduction for all succeeding years.
- Claiming under section 154 for a dependant. That is section 127.
- Claiming both section 154 and section 127 for the same person's disability.
- Failing to attach the certificate with the return, which sub-section (2)(c) makes a condition.
- Assuming actual medical expenditure increases the deduction. It is a fixed amount.
- Claiming as a non-resident.
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.