By Sanskriti Agrawal and Ashis Dikshit
Over the past decade, India’s approach to disability inclusion has undergone a quiet but deliberate transformation. The Government’s shift in public discourse from the outdated term “Viklang” to the more empowering “Divyang” reflects a larger commitment to dignity, respect and equal participation. This commitment has been backed by real measures, from the Rights of Persons with Disabilities Act, 2016, to the Accessible India Campaign and concessions on assistive devices. That foundation is now strong enough to support the next stage of reform. A closer look at how the tax code treats two everyday aids shows exactly where that next stage could begin.
A wheelchair and a screen reader do very different jobs: one lets a person move, the other lets a person work, study, or argue a case in court. Indian tax law treats them very differently. Wheel a chair through customs and it mostly escapes duty, protected by a standing exemption that leaves only 5% IGST to pay. But the screen-reading software that lets a visually impaired law graduate use her degree is taxed at the standard 18% rate charged on ordinary business software, the same rate you’d pay for accounting software. India’s GST framework already offers real relief: hearing aids are fully exempt, while wheelchairs, artificial limbs and specified Braille-related assistive devices attract a concessional 5% GST rate. It’s a good start that was never finished. Closing the gap doesn’t need a new philosophy, just three changes: tax assistive software at the same concessional rate as physical aids; give disability-device manufacturers faster access to the tax credit refunds they’re already owed; and free the income-tax deductions meant for disabled people and their caregivers from the Old Tax Regime, so families no longer have to trade away simplicity for a benefit that was built for them.
Look past the price tag on the finished chair, though, and a second, quieter problem appears. The aluminium, motors, microprocessors and batteries that go into a wheelchair are taxed at the standard industrial rate of 18%, while the assembled product sells at just 5%. That mismatch, an “inverted duty structure”, isn’t meant to be a crisis: manufacturers can legally claim back the difference as an input tax credit, and the GST Council has acknowledged the problem in its own refund guidance. In practice, though, refunds move slowly enough that an imported, duty-exempt wheelchair can often reach the market faster and cheaper than one assembled in Coimbatore or Pune. The Government’s underlying logic is sound: exempting the finished product outright, rather than taxing it at 5%, would strip manufacturers of the right to claim credit at all, which could push prices up rather than down. What would help most is not a change in policy design, but faster and more predictable refund processing.
Step outside the tax code, and the human cost is harder to ignore. A 2023 study in PLOS ONE, drawing on the Government’s 76th National Sample Survey, found that households with a disabled member spend, on average, ₹2,477 a month out of pocket on related care, over a fifth of everything they spend. For more than half of these families, that spending crosses into what researchers call a crisis level, and nearly one in five families that were above the poverty line before a member needed treatment fell below it afterward. It’s the poorest households, not the wealthiest, who give up the largest share of their income to this, even though richer families spend more in absolute rupees. The concessions that exist today help every family a little. They don’t yet help the poorest family enough.
There is real relief on the income-tax side too. Section 80U provides a flat deduction of ₹75,000 for a person with a disability and ₹1,25,000 for a person with a severe disability, while Section 80DD provides a corresponding deduction to taxpayers who incur expenses for the maintenance and medical treatment of a dependent with a disability. The catch is structural: these deductions only apply under the Old Tax Regime, even as the New Regime is now the default most taxpayers are nudged toward. A family raising a child with cerebral palsy has to actively opt out of the simpler, more convenient system just to keep a benefit that was designed for them in the first place.
India isn’t alone in wrestling with this, and it doesn’t have to solve it from scratch. Canada zero-rates a wide range of medical and assistive devices under its GST/HST system, so a disabled person pays no consumption tax on an eligible aid while the supplier still keeps the right to claim input credit, solving, in one stroke, the exact inversion problem Indian manufacturers face. The UK goes further on scope, extending VAT relief to goods and services bought by disabled people for personal use, treating a support worker’s help the same way it treats a wheelchair. And Australia’s GST-free list includes supports delivered under its National Disability Insurance Scheme, recognising that a service can be as essential as a device. None of this requires India to import a foreign system wholesale. It points to one simple principle: tax should never be the reason someone can’t participate. A screen reader, a physiotherapy session, a wheelchair, treated as three different categories today, are, to the person using them, the same thing: the price of equal access.
Economists have a name for part of this problem: Amartya Sen called it the “conversion handicap”, the extra resources a disabled person needs just to convert the same income into the same quality of life everyone else takes for granted. In India, that gap has been estimated at 12–26% of a household’s total spending. The Constitution asks the state to provide for the disabled “within the limits of its economic capacity”, and while that capacity has grown enormously since 1950, the fine print hasn’t kept pace. Unlike that aspirational promise, the Constitution’s guarantees of equality before the law and equal opportunity in employment are meant to be enforceable, not aspirational. A tax code that continues to treat a wheelchair and a screen reader as different categories of urgency has an opportunity to align more fully with the equal footing envisaged by the Constitution and advanced by the Government’s own policy direction.
The case for reform is ultimately practical: a tax system should make independence more affordable, not more complicated. Bringing assistive software within concessional GST treatment, ensuring timely input-tax-credit refunds for domestic manufacturers, and making disability-related income-tax deductions available under either tax regime would convert existing support into easier access in everyday life. These targeted measures would help lower costs for families, strengthen Indian production of assistive technologies, and enable more Divyangjan to study, work and participate on equal terms. In doing so, they would give concrete fiscal expression to India’s wider commitment to inclusion and help advance the promise of a Viksit Bharat in which no Divyangjan is left behind.
Disclaimer: The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect the views, positions or policies of Vision Viksit Bharat Policy & Research Centre. The article represents the independent perspectives of the writers.
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Sanskriti Agrawal is a GRAAM Embark India Development Fellow. Her research focuses on disability-inclusive public policy, budgeting, corporate governance, and implementation of the Rights of Persons with Disabilities Act, 2016.
Ashis Dikshit is a Project Coordinator at Central Square Foundation, supporting the monitoring and governance of the NIPUN Odisha programme. He is a former YLAC Breaking Barriers Fellow, where his research focused on the burden of caregiving for persons with disabilities and disability-inclusive public policy. He holds an MBA from XIM University, Bhubaneswar.
