Three days after the order to remove tax exemption on disability pension was issued leading to massive discontentment amongst the armed forces, Defence Minister Rajnath Singh assured that he will look into the issue.
The circular issued by the Central Board of Direct Taxes (CBDT) on Monday last said the disability pension given to military personnel will be taxable unless they have to leave the service due to the disability sustained in service.
Taken aback by the directive, services personnel, serving and retired, contended that disability mostly takes place while fighting for the country and there was never any taxes on disability pension in the past.
Replying to Congress leader Adhir Ranjan Chowdhury, the Defence Minister said, “I will look into the issue. The Ministry is
gathering information and will get back with details to the House”.
The Defence Minister also said that in the last 40 years people were kept in the dark as far as ‘One Rank One Pension’ (OROP) is concerned and were misled “but our Government brought it into force”.
Officials, however, justified the order saying senior officers were misusing the disability clause for claiming tax exemption thereby denying genuine claimants.
Sources also said, the new rule applied only to those personnel who served their full tenure and retired with disability and therefore not exempted from income tax.
Associating itself with the services personnel agitated over the matter, Congress leader Adhir Ranjan Chowdhury raised the issue in the Lok Sabha on Thursday.
As soon as he drew the attention of the House on the matter during the zero hour, Congress members rushed to the well and raised slogans like “sena ko nayay do” (Give justice to Army) and “sena ke naam pe vote mangana band karo’ (stop asking votes in the name of Army). Disability pension is of two types, war and normal.
War disability is 60 per cent of the last salary drawn in case of 100 per cent disability and normal disability is 30 per cent of the last salary drawn in case of 100 per cent disability.
Till now both were not being taxed if the disability is decided by a team of doctors, some service personnel said adding there are some ambiguities in the CBDT notification.
It is not stated from when it would be effective, they said adding it was also not clarified in the order whether pension will be taxed with retrospective or prospective effect.
The move drew the ire of the armed forces which are already unhappy over several recent measures seen as lowering their status and equivalence compared to their civilian counterparts. One officer termed it as “reinterpreting” of the rules by the Finance Ministry.
However, officials defending the decision to do away with tax exemption said it was done to stop misuse as there was a steep increase in such claims by senior officers just before retirement.
