Update : Tax on Disability Pension of Military Veterans

Published: June 27, 2019

After a ruckus in the lower house of the Parliament, Defence Minister Rajnath Singh has assured the house that he would inquire into the matter of tax on the disability pension for military veterans.

Want is the issue?

  • The Central Board of Direct Taxes had come out with a circular which stated that the disability pension received by the military personnel who had completed their entire service will be taxed.
  • All Armed forces personnel who suffer any kind of disability due to their service receive a separate disability pension.
  • The quantum of the amount depends on their rank and the type of disability.
  • Conventionally, such tax exemption is available to armed forces personnel who have been invalidated (forced to resign/leave) from the service on account of bodily disability attributable to or aggravated by such service.
  • However, if the personnel is not forced to retire from the service/active duty due to the injury/disability, they will be liable to be taxed on the pension received.
  • This is contradictive, as a few soldiers continue to serve in the military even after losing limbs/suffering grievous injuries. A disability pension for them is only right and imposing a tax on it, is regressive.

What lies ahead?

The Defense Minister has assured that the interest of the soldiers, in this case, will not be comprised with. However, CBDT officials have claimed that a few soldiers have benefited unethically from the disability pensions, especially after the 7th Pay Commission greatly increased the payouts related to it.

 

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