Sixty-four Ex-Servicemen have approached the Supreme Court against a circular from the Central Board of Direct Taxes (CBDT) that withdrew the Income Tax (IT) exemption on the Disability Pension drawn by those who retire after full service (or supperannuation). The Veterans include 54 officers and 10 Jawans. According to Col IS Singh (Retd), counsel for the petitioners, the case is likely to be heard next week.
The June 24, 2019 circular said: “Further, such tax exemption will be available only to armed forces personnel who have been invalided out of service and not to personnel who have been retired on superannuation or otherwise.” The circular has been signed by Rajarajeswari R., an Under Secretary level officer in the Department of Revenue. Fauji India is in possession of the circular. This means, those nearing the end of their full tenure, or taking a Pre-Mature Retirement (PMR) and are declared eligible for Disability Pension by medical boards will have to pay Income Tax. The circular however does not clarify when the new rule will come into effect.
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.