In the backdrop of outcry by serving and retired Services personnel following a Finance Ministry order in June withdrawing income-tax exemption on disability pension, the Army is working out modalities to retain the exemption to some extent and tax the rest of the amount.
Moreover, the Service has already implemented a rule that all officers above the rank of Major General with two years of service left before retirement undergo mandatory medical check up at the command hospitals all over the country. This step was initiated to prevent misuse of availing disability pension by retiring personnel even if they are in top class physical condition. The income tax exemption for disability pension is in force since 1922.
In fact, most of the cases of misuse of disability pension pertain to the officer cadre, Adjutant General Ashwani Kumar said here on Thursday. His observations come in the background of Central Board of Direct Tax(CBDT)in June this year issuing a notice withdrawing income tax exemption on disability pension availed by officers who have served their full tenure of service. However, the invalidated personnel were allowed the exemption to the full extent as per the order.
The CBDT note led to unrest amongst the Armed forces and the issue also figured in Parliament and Defence Minister Rajnath Singh assuring the agitated Opposition that he had asked his officers to get in touch with the Finance Ministry. He also said the interests of the Services personnel will not be harmed.
Outlining the proposed measures, the outgoing Adjutant General, who is responsible for maintaining discipline and welfare measures like pension, said at least 70 to 80 officers retire ever month and 35 percent of them avail disability benefits due to low medical category attributable to service conditions.
Admitting that some officers had wrongly availed such benefits, Kumar, however, said these guilty officers were given due punishment. In view of such cases, Army Headquarters is tweaking its rules with bringing more checks and balances into the system. To regulate the medical board, now Major General and above in last two years of service, will have to get theirmedical done at the Armed Forces Clinic in Delhi or to nearest Command hospitals. Earlier they used to any nearest military hospital, Kumar said. Very soon this provision will also apply for the Brigadiers and other officers also.
The Army Headquarters has sent some proposals before the Ministry in this regard for further approval. On the issue of levying tax on disability pension, Kumar said “Not everyone with the disability should be exempted and I feel there should be an upper limit for exemption.” Issue of levying tax on the disability pension has been challenged in the Supreme court by several veterans. The sensitive issue also saw the Army Headquarters officially backing the decision to tax disability benefits.
In a series of tweets, the Army criticised “personnel seeking disability, even for lifestyle diseases” for tax-exemption purposes and said it highlighted a worrying trend in the face of “security challenges to the nation”.
“Over the years, broad-banding and compensation awarded for disability with income tax exemption have led to a rise in personnel seeking disability, even for lifestyle diseases. The trend is worrisome and that too when the security challenges to the nation are on the rise,” it said when the issue was raging some months back.