During the Union Budget speech 2022, Finance Minister Nirmala Sitharaman simplified the tax deduction rules relating to insurance for differently-abled persons.
Currently, parents or guardian of a differently-abled person can take an insurance scheme for such person. So, it is not a novel concept - so to speak.
The law earlier gave tax exemption to the parent or guardian only in the situation when the lumpsum payment or annuity is made available to the differently-abled person after the subscriber, either a parent or guardian, passes away.
There could be situations where differently-abled dependants may need payment of annuity or lumpsum amount even during the lifetime of their parents/guardians.
The FM allowed the payment of annuity and lump sum amount to the differently abled dependent persons even during the lifetime of parents or guardians. This would be done upon parents attaining the sixty years of age.
This tax relief is proposed to be added under section 80DD of the income tax act. Earlier section 80DD of the Income-tax Act, 1961 allowed deduction where it was a term plan where the disabled person being the beneficiary would get the lump-sum or annuity payment only in case of the death of the subscriber i.e., parents or guardian.
However, such deduction is currently available only if the annuity or the lumpsum is receivable after the death of the subscriber. This has been relaxed to extend the deduction even if such sum is received during the life-time of the subscriber.