The circular that revoke Income Tax exemption on Disability Pension on servicemen who retire after full service, was issued after data analytics found that the provision meant for the needy was being misused, the CBDT chairman PC Mody has said. Mody said the circular issued on June 24 was not a new directive but only in clarification to the stated policy.
“We have full respect for the soldiers working in the armed forces. If there is any disability, then this provision is there but what happened was that over a period of time, the data analytics showed that many were claiming it and that it was being misused. To stop this, a clarificatory circular was issued. If disability happens due to action, then this pension is untaxed as it has been,” the CBDT chief said.
The Central Board of Direct Taxes (CBDT) circular no 13 of 2019 stated, “Such tax exemption will be available only to armed forces personnel who have been invalidated from service on account of bodily disability attributable to or aggravated by such service and not to personnel who have been retired on superannuation or otherwise.” The move triggered outrage amongst military Veterans. The matter became murkier following Finance Minster Nirmala Sitharaman’s office tweeting a letter from the Army headquarters which said how undeserving personnel have wrongfully claimed Disability Pension, indicating how the army was acting against its own interest.
The Indian Army soon followed by officially support the stand. It tweeted: “Indian Army is concerned for all personnel who are invalidated out of service in combat conditions or otherwise, and need additional support and discourages those who seek financial gains through their disabilities.” This enraged Veterans further who took to social media criticizing the army for campaigning against it’s own. The Army said that over the years, broad-banding and the compensation awarded for disability with income tax exemption had led to a rise in the number of personnel claiming disability even for lifestyle diseases.
A group of disabled war veterans of these forces had expressed their resentment at the move, saying, “Disability compensation is not only limited to war or operation disabilities, but is also available to all other medical conditions that arise while a person is serving in the military.” Ex-Servicemen also pointed out how fraudulent Disability Pension claims should be dealt with disciplinary action against the errant officers and stricter regulation and vigilance, and not a disproportionately harsh act of taxing the pension of all superannuating personnel. “In fact, as per rules, all disabilities arising in service are presumed to be related to service conditions since a person joins the military after a series of tests for physical and mental fitness,” the Veterans said in a letter.