Maj Gen Amrit Pal Singh (Retd) The e-space is abuzz with opinions and interpretations of the Central Board of Direct Taxes (CBDT) circular of June 24 on the latest ruling on taxation of disability pension to the armed forces personnel. The furore it has created in the military and veteran circles is not something that the prudent should ignore or relegate as background chatter. The circular in question refers to the Income Tax Act 1922 and notification number 878-F of March 1922, among other sections and instructions, issued from time to time. The missive clarifies that income tax exemption would be available to all armed forces personnel (irrespective of rank) who have been invalided out of such service on account of bodily disability attributable or aggravated by such service. In the last paragraph, the letter drops the bombshell by stating that such tax exemption will be applicable only to those personnel who have been invalided out of 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. The rigours of military service are known to all and there is no questioning the extreme conditions of service that obtain in various facets and areas where personnel are deployed in the defence of the country. The very fact that the law caters for disability is proof of the recognition of the need to compensate a serviceman or woman for the bodily disability attributable or aggravated by her or his service. The latest circular now intends to clarify the applicability of taxes on the disability pension and, in effect, creates different classes of disability for purpose of taxation. A few at a glance are: First, the disability that causes a soldier to be invalided out of service as the disability was so severe that they could not serve in the forces due to it. Second, the disability that is caused due to service but the individual is yet capable of serving (albeit under restrictions due to medical reasons) in what is called a ‘medical category’ in military parlance. The third class now formed is that of those personnel who had attributable or aggravated disability and chose to leave service prematurely. The now-formed third class of disabled soldiers, in all probability, may have opted out of service due to the limited terms of service the medical category offered them or purely out of soldierly pride not allowing themselves acceptance of any concessions when they expect the troops they command to undertake all tribulations. Their disability in no measure is less attributable as, for example, the case of a soldier deployed in the icy heights of Siachen who suffers from pulmonary oedema and is downgraded to a medical category that does not allow him to serve in extreme areas thereafter – he has an option to remain a medical category for all of his service and feel like a ‘second grade’ soldier for no fault of his or to leave service honourably. These soldiers are no less deserving of disability pension and taxing it now could have ramifications on risk-taking decisions by soldiers. There is a need by the government to look at the larger picture.
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