A provision in Finance Bill 2026 that seeks to provide income tax benefits only to soldiers discharged due to service-related disability and exclude those who served and became disabled has sparked outrage in some military circles, with many veterans saying the two categories have been classified. disabled soldier
Several veterans said the discrimination was unjustified and created two classes of disabled soldiers. (AFP/Representative)Some opposition parties have also criticized the ongoing development Budget Session of Parliament.
The Bill proposes to provide an express statutory exemption from disability pension in cases where a person has been terminated from service on account of disability arising from or arising from such service.
“However, the said exemption shall not be available where the person has retired from service or otherwise retired from service,” it said.
AIMIM MP on Wednesday Asaduddin Waisi The withdrawal of tax benefits for disabled soldiers launched a scathing attack on the government during the general debate on the Union Budget in the Lok Sabha. It came a day later Congress MP Shashi Tharoor raised the matter in the Lok Sabha, calling it a disturbing development.
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“This move undermines social security for disabled veterans who have risked their lives for our country and draws an unbridgeable line between service-connected disability and abdication of the state’s moral responsibility to those who have made such sacrifices for the nation,” Tharoor said.
Several veterans have called for a review of this provision.
On Tuesday, former army chief General VP Malik (retd) said he hoped the government would review the removal of tax exemptions for disabled soldiers who serve and leave service.
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“If disabled, soldiers are allowed to continue service only after approval from a Med Board. When disabled as a young officer, one has been promoted to the rank of Maj General and Lieutenant General, along with a Vice Chief. This new disparity is unjustified and uncalled for,” he wrote in X, in response to a post on the matter.
According to CBDT’s circular dated June 24, 2019, disability pension will be exempt from income tax only in cases where a service member is invalided out of service before completing his regular service due to service conditions or deterioration due to medical conditions, Defense Ministry officials said on Wednesday.
“This clarification is based on the Income Tax Acts 1922 and 1961. However, this provision was interpreted loosely to provide benefits even to employees who were not out of service and who completed their normal service but retired in a lower medical category. These LMC cases do not fall under the IT exemption as they remain an officer in service,” said.
Such persons who complete their service do not get disability pension, but service pension and disability component (which is now called disability relief to remove the confusion of equating it with disability pension as per Entitlement Rules 2023), but they do not get exemption from income tax, another official said on condition of anonymity. “This is further clarified in the new Finance Bill now under consideration.”
The revised policy, Entitlement Rules for Casualty Pension and Award of Disability Compensation to Armed Forces Personnel, 2023 and Guidelines for Medical Officers, came into effect on September 21, 2023. This is in line with the Rights of Persons with Disabilities Act, which came into effect in 2017, a subject said.
Five months after the Comptroller and Auditor General (CAG) asked the Ministry of Defense to analyze the causes of disability among soldiers, the government issued new rules in September 2023 that about 40% officers and 18% personnel below officer rank (PBOR) who retire every year get disability pension.
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The National Auditor examined disability pensions distributed to redundant workers between 2015-2020.
The new rules governing disability pension will protect the legitimate interests of those who acquire disability during service, prevent misuse of generous provisions, help the armed forces run efficiently, ensure combat readiness and encourage physical fitness across the board, Chief of Defense Staff General Anil Chauhan said then.
(with inputs from Adrija Dutt)
