Disability pension for military personnel who retired normally from service and not invalidated will now be taxed, according to a notification issued by the Finance Ministry.
In the notification dated June 24, the Central Board of Direct Taxes (CBDT) said that “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.”
Disability pension are of two types, war and normal. War disability is 60% of the last salary drawn in case of 100% disability and normal disability is 30% of the last salary drawn in case of 100% disability. It goes down proportionally for lower percentage of disability. Disability pension for armed forces is available based on a 1922 notification.
“Till now both were not being taxed if the disability is decided by a team of doctors,” a defence official said on Tuesday. There were two ambiguities in the CBDT notification; it was not stated from when it would be effective. “It isn’t state whether it would be prospective or retrospective,” he stated.
The move has come under criticism from the military fraternity, which has already been missed due to several recent measures seen as lowering their status and equivalence compared to their civilian counterparts. One officer termed it “reinterpreting” the Finance Ministry rules.
As per procedure, the CBDT will now issue a circular to all the banks for implementation as they are the ones that disburse the pensions.
Disability pension has long been an issue of contention over the rates and different slabs for officers and jawans, among others. There are also a large number litigations filed by veterans against the Defence Ministry over non-recognition of disability.