The disabled servicemen of naval, military or air forces to get tax free pension

The Union Finance Ministry announcement on the tax-free pension for the disabled servicemen

The Union Finance ministry under the chairmanship of Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman had announced that disability pension would be tax-free for only those personnel who had to leave service because of disability suffered while on duty.

The pension shall be not being tax-free for those defense forces personnel who retired from their services or attained superannuation.

As a circular issued by the finance ministry, it has been stated that such tax exemption would be available only towards the armed forces personnel who have been invalided from service in view of bodily disability attributable to or aggravated by means of such service and not to personnel who have been retired on superannuation or otherwise.

The government circular is applicable in the direction of personnel of each and everyone ranks from Army, Air force as well as Navy.

There are three types of disability pensions which contain the war injury, normal disability (attributable to the military service) and the one aggravated by the military service.

Earlier this year, the defense ministry had chosen that disability or war injury pension for armed forces personnel shall be minimum Rs. 18,000 per month.

• As per the existing provisions of clause (i) of sub-section 2 of section 297 of the Income­ tax Act, 1961 (‘Act’) any notification issued under sub-section (1) of section 60 or section 60A of the Indian Income-Tax Act, 1922 (now repealed) as well as in force immediately before the commencement of the Act shall continue towards being in force to the extent to which no provision has been made under the Act. Previously, in the exercise of powers conferred under section 60 of the Indian Income-Tax Act, 1922, vide Notification no. 878 F dated 21.03.1922, it was ordered at para 19 that “pensions granted to members of His Majesty’s naval, military or air forces who have been invalided for naval, military or air force service on account of bodily disability attributable to or aggravated by such service would be exempt from tax under the Indian Income ­ Tax Act, 1922″.

• In furtherance to the above, instruction 136/1970 dated 14.01.1970 in F.No. 34/3/68 IT(AI) and instruction no. 2/2001 dated 02.07.2001 in F.No. 200/51/99-ITA-1 have been issued for clarifying that the entire disability pension, that is, “disability clement” as well as “service clement” of a disabled officer of the Indian Armed Forces continues towards being exempted from income tax under the Income-tax Act, 1961.

• Representations have been received, requesting to explain whether the exemption is applicable only towards the disabled officers of Armed Forces or every disabled Armed Forces Personnel (that is, including officers and jawans). Representations have likewise been received to explain as to whether the Income Tax exemption shall be limited to only such disabled Armed Forces Personnel who are invalided out of service because of disability attributable to or aggravated by military service condition or to even those who retire after full service with some disability.

• The matter has been observed in the notification no. 878-F dated 21.03.1922, gives income tax exemption towards every member of Armed Forces who have been invalided for naval, military or air force service due to bodily disability attributable to or aggravated by such service. Therefore, the income-tax exemption under the above clause would be available to every armed forces personnel (irrespective of rank) who have been invalided for such service due to bodily disability attributable to or aggravated by such service.

• Furthermore, such tax exemption would be available only towards the armed forces personnel who have been invalided from service due to bodily disability attributable to or aggravated through such service and not to personnel who have been retired on superannuation or otherwise.

Prime Minister Narendra Modi and his party Bharatiya Janata Party (BJP) has claimed a landslide victory in the 17th Lok Sabha 2019 elections and has won a majority of 352 seats of the 543 seats in parliament.

Nirmala Sitharaman, who served as the full-time Defence Minister of India in the Narendra Modi government from September 2017 to May 2019, has been appointed as the new finance minister in this 2nd term of the Modi Government. The Union Finance Minister Nirmala Sitharaman held her first GST Council meeting on 21st June 2019. Nirmala Sitharaman has been appointed as the new finance minister in this 2nd term of the Modi Government and stepped into the shoes of the former Union Finance Minister Arun Jaitley who opted out of the ministerial position in the new government on health grounds.

Author:

eStartIndia Team