Start with eligibility and the tax regime
Section 127 of the Income-tax Act, 2025 concerns maintenance, including medical treatment, of a dependant with disability. For tax year 2026–27, the claimant must be a resident individual or resident HUF and satisfy the expenditure or approved-scheme route. The enacted text states a deduction up to ₹75,000, with ₹1,25,000 substituted for severe disability. Do not treat disability in a family as sufficient by itself. Read the official section 127 text.
Section 202(2)(a)(xii) excludes this Chapter VIII deduction in the default regime. A claimant seeking it must validly use the alternative regime and satisfy the applicable option requirements. Business-income cases have different option restrictions from non-business cases; a deduction working alone does not establish that the option was validly exercised. Current Act as amended by Finance Act, 2026. Checked on 25 October 2026, this article addresses deduction eligibility rather than medical diagnosis or a complete tax-regime comparison.
Establish the dependant, the expenditure and the correct claimant
For an individual, the listed relationships are spouse, children, parents, brothers and sisters. For an HUF, the dependant is a member. In either case the person must be wholly or mainly dependent on the claimant for support and maintenance. A relationship certificate and a dependency analysis answer different questions. Retain an explanation of the dependant’s resources and who actually bears the qualifying costs.
The expenditure route includes medical treatment, nursing, training and rehabilitation. The scheme route requires the statutory approved arrangement and its payment, nomination and benefit conditions. Do not label an ordinary family investment or any insurance policy as an approved maintenance scheme. Record payments by claimant and tax year; remove unsupported entries rather than assuming a diagnosis validates every bank debit. The examples use qualifying amounts above the relevant limits, and do not resolve a lower-expenditure claim by importing a legacy fixed-deduction description into the current wording.
Certificates and reassessment are annual return controls
Section 127(6) requires the medical certificate in the prescribed manner with the return. Under rule 61 of the Income-tax Rules, 2026, Form 30 applies to the specified autism, cerebral palsy or multiple-disability cases. Other cases follow the prescribed certificate route identified in that rule. Do not demand Form 30 indiscriminately for every disability or substitute a treatment invoice for the statutory certificate. Rule 61 and Form 30 in the notified 2026 Rules.
Where reassessment is required, rule 61(3) makes the certificate valid from the tax year of issue through the tax year in which validity expires. Section 127(7) denies the deduction for succeeding tax years without the required new certificate. Preserve issue date, expiry date, applicable tax year and reassessment status. The severe-disability definition includes the statutory 80%-or-more limb and the specified National Trust Act category; use the competent authority’s certification, not a percentage inferred from expenses.
Coordinate the family claim and review scheme receipts
Section 127(8) excludes a dependant who has claimed section 154 in computing their own total income for the same tax year. Obtain a specific declaration and reconcile the dependant’s return position. A self-disability claim and a dependent-maintenance claim are separate provisions; sharing a medical certificate does not authorise both claims for the same person and year.
For an approved scheme, section 127(2) includes benefit payment on the subscriber’s death or on attaining sixty years or more where contributions have been discontinued, with the required nomination. If the dependant dies before the subscriber, subsection (4) addresses the amount paid or deposited becoming income in the tax year of receipt. Subsection (5) protects the specified amount received by the dependant before death under the age-sixty route. Trace who received what, when and under which clause before deciding the tax treatment.
Avoid shortcuts in the return file
Typical failures are claiming under the default regime, using the wrong relative, ignoring HUF membership, reusing an expired reassessment certificate, claiming for a dependant who used section 154, or confusing deductions with direct tax refunds. The figures below are deductions or eligibility outcomes, not cess-inclusive tax savings. A full liability computation must separately consider income, regime, rates, rebate, surcharge and cess.
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Ordinary eligible limit
Assume a resident individual validly uses the alternative regime, has an eligible certified dependant, qualifying expenditure of ₹1,50,000 and no conflicting claim. Applying the ordinary ₹75,000 limit gives ₹75,000; ₹75,000 of the stipulated expenditure lies above that limit.
Illustrative example 2: Severe-disability limit
On the same assumptions, with severe disability duly certified and qualifying expenditure of ₹1,50,000, the applicable substituted limit is ₹1,25,000. The claim working is ₹1,25,000; ₹25,000 lies above the limit. This is ₹50,000 more than the ordinary limit, not ₹1,25,000 added to ₹75,000.
Illustrative example 3: Default-regime exclusion
A resident claimant has otherwise qualifying expenditure of ₹1,80,000 for a severely disabled dependant but remains in section 202’s default regime. Section 127 deduction in that regime is ₹0, rather than ₹1,25,000. This does not by itself prove that switching regimes reduces final tax.
Illustrative example 4: Conflicting self-disability claim
Assume ₹1,50,000 qualifying expenditure and an ordinary-limit case, but the dependant has claimed section 154 for the same tax year. Section 127(8) excludes that person as a dependant for this claim: the claimant’s deduction is ₹0, rather than the otherwise modelled ₹75,000.
Illustrative example 5: Resident HUF claimant
A resident HUF spends ₹2,00,000 on qualifying care of a dependent member with certified severe disability and satisfies all other conditions, including the regime. The section 127 working is ₹1,25,000, leaving ₹75,000 above the limit. An individual family member cannot simply repeat the HUF’s claim for that same payment.
Illustrative example 6: Certificate spanning tax years
Assume a reassessment certificate issued on 10 May 2026 expires on 30 June 2027. The rule 61 validity model covers tax years 2026–27 and 2027–28, two tax years. A claim in 2028–29 requires the prescribed renewed certificate; the old certificate alone supports no deduction then.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Fix period and law | Tax year 2026–27 and the current section 127 text. |
| 2 | Verify claimant status | Residence and individual or HUF identity. |
| 3 | Confirm the regime | Valid alternative-regime option and business-income restrictions. |
| 4 | Identify the dependant | Listed relationship or HUF membership and dependency evidence. |
| 5 | Classify the route | Qualifying care expenditure or an actually approved scheme. |
| 6 | Verify payments | Claimant-wise, year-wise bank and supporting records. |
| 7 | Inspect certification | Competent authority, correct prescribed form and disability category. |
| 8 | Diarise reassessment | Issue, expiry and renewed certificate for succeeding years. |
| 9 | Prevent conflicting claims | Dependant’s section 154 declaration and return reconciliation. |
| 10 | Complete the return file | Limit working, required certificate furnishing and any scheme-receipt analysis. |
Sixteen practitioner FAQs
1. Can a company claim this deduction?
No. Section 127 addresses resident individuals and HUFs.
2. Does the default regime allow it?
No. Section 202’s Chapter VIII restriction excludes section 127.
3. Is a parent an eligible relationship?
Yes, subject to the wholly or mainly dependent condition and the remaining requirements.
4. Is every relative covered?
No. Use the statutory list rather than a general family relationship description.
5. Can an HUF claim for a non-member?
The HUF dependant limb requires a member of that HUF.
6. Does a large medical bill prove severe disability?
No. Use the competent authority’s certification and statutory definition.
7. Are the two monetary limits cumulative?
No. ₹1,25,000 substitutes for ₹75,000 in the severe-disability case.
8. Does a medical diagnosis alone complete the expenditure route?
No. Establish the qualifying expenditure incurred during the year as well as the other conditions.
9. Is every insurance policy an approved scheme?
No. Verify the approval, benefit and nomination requirements of section 127(2).
10. Is Form 30 universal?
No. Rule 61 distinguishes the specified conditions requiring Form 30 from the other prescribed certificate route.
11. Can an ordinary hospital bill replace the certificate?
No. The prescribed medical certification is a separate statutory requirement.
12. Does expiry midway through a tax year always eliminate that year?
Rule 61(3) addresses validity through the tax year of expiry; succeeding years require the necessary new certificate.
13. Can the dependant also claim section 154?
Section 127(8) excludes a dependant who has claimed that deduction for the same tax year.
14. Are payments from a maintenance scheme always exempt?
No. Check the recipient, timing and subsections (4) and (5), including the specified age-sixty exception.
15. Is ₹75,000 the amount of tax refunded?
No. It is the ordinary deduction limit, not a tax refund or tax-credit amount.
16. What makes the file defensible?
A consistent regime, relationship, dependency, payment, certificate and no-conflict evidence trail.
Conclusion
A resident individual or HUF must establish eligible maintenance expenditure or an approved scheme, dependency, certification and an eligible tax regime before claiming section 127. Check the ₹75,000/₹1,25,000 limits and prevent a conflicting section 154 claim by the dependant.