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SOME USEFUL INFORMATION TO DEFENCE PENSIONERS

, by indianmilitaryveterans

1. Fixed Medical Allowance @ Rs.100 was introduced w.e.f. 01.12.1997.
2. Fixed Medical Allowance @ Rs.1000 was increased w.e.f. 01.07.2017.
3. ECHS members not eligible for Medical Allowance.
4. EPF Pension in addition to Defence Pension Family pension allowed w.e.f. 27.07.2001
5. D.R. for re-employed ex-servicemen with some conditions w.e.f. 18.07.1997.
6. Minimum Ordinary Family Pension as per 7th CPC is Rs.9,000 w.e.f. 01.01.2016.
7. Minimum Special Family Pension as per 7th CPC is Rs.17,990 w.e.f. 01.01.2016.
8. Compensation for Delayed payment of Pension/Arrears to be paid w.e.f. 01.10.2008.
9. Improvement in pension for ORs & JCOs as per CDA Circular 430 w.e.f. 01.07.2009.
10. ECHS made compulsory for those discharged after 01.04.2003.
11.There is no fee for pre 1.1.96 pensioners to join this scheme.
12.From 1.1.96 to 31.3.2003 they have to pay to join this scheme.
13.From 29.12.2017 the rates have been increased.
From Recruit to Hav rank Rs.30,000
From Nb.Sub. to Hon.Capt and Equivalents. Rs.67000
All Officers Rs.1,20,000
14. ADLR Scheme Funeral Grant Rs.10,000 w.e.f. 08/07/2016. Paid by Canteen.
Zilla Sainik Board pays Rs.5000 funeral grant.
Dignified Last Rites grant Rs.7,500 to Air Veterans by Air Force.
15. ESM can draw two pensions separately without any ceiling w.e.f. 01.01.1996.
16. Additional pension is payable after 80 years on both the pensions, if any one drawing two pensions.
17. Additional pension is applicable for WIP/Disability Pension/Lib.FP & SFP.
18. D.R. is admissible to employed family pensioners without any condition w.e.f. 18.07.1997.
19. W.E.F. 01.07.2009 the concept of Broad banding of percentage of disability/War injury Shall be extended to Armed Forces Officers and others who were invalided out of service prior to 01.01.1996 and are in receipt of disability/war injury pension as on 01.07.2009.
20. Joint notification of family pension was introduced from 01.03.1985. Those who do not have joint notification for family pension, they have to apply immediately.
21. The Cap on maximum WIP i.e. not to exceed emoluments last drawn has been removed W,e,f, 01.07.2009.
22. Liberalised family pension came into existence from 01.02.1972.
23. War disabled pensioners & widows are exempted from paying ECHS contribution.
24. ECHS facility is now extended to the dependents of ex-recruits boarded out are drawing Disability pension.
25. Always keep your pension account jointly with your Spouse. (E or S or F or S basis)
26. Link your Aadhaar Number and PAN number with your Pension account.
27. Do not forget to give Life Certificate to the Bank in November every year.
28. If your husband died before the age of 65 you will get the same pension he was getting.
29. All family pensioners must give nomination to their pension accounts.
30. Be a member of nearby Ex-servicemen welfare Association.
Courtesy: indianmilitaryveterans

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Budget 2018 – FM May Hike Tax Exemption Limit From Rs 250,000 To Rs 300,000

, by indianmilitaryveterans

Govt could lower tax rate by 10% on income between Rs 5,00,000 and Rs 10,00,000, levy 20% rate for income between Rs 10,00,000 and 20,00,000 and 30% for income beyond Rs 20,00,000.

Middle class can hope for a big relief in budget 2018 -19, which will also be the last regular Budget of the NDA government, as the finance ministry is contemplating to hike personal tax exemption limit and tweak the tax slabs, according to sources. The proposals before the ministry is to hike the tax exemption limit from the existing Rs 2,50,000 per annum to at least Rs 3,00,000 if not Rs 5,00,000, they said.

Besides, the tinkering of tax slab is also being actively considered by the ministry to give substantial relief to middle-income group, especially the salaried class, to help them tide over the impact of retail inflation, which has started inching up. In the last Budget, Finance Minister Arun Jaitley left the slabs unchanged but gave marginal relief to small tax payer by reducing the rate from 10 per cent to 5 per cent for individuals having annual income between Rs 2,50,000 and Rs 5,00,000.

In the Budget 2018 to be unveiled on February 1, the government could lower tax rate by 10 per cent on income between Rs 500,000 and Rs 1,000,000, levy 20 per cent rate for income between Rs 1,000,000 and Rs 2,000,000 and 30 per cent for income beyond Rs 2,000,000. At present, there is no tax slab for income between Rs 10,00,000 and Rs 20,00,000. “Considering the steep rise in cost of living due to inflation, it is suggested that basic limit for exemption and other income slabs should be enhanced to give benefit to low income group.
The income trigger for peak rate in other countries is significantly higher,” industry chamber CII said in its pre-Budget memorandum to the finance ministry. Although the industry chambers want the government to reduce peak tax slab to 25 per cent, it is unlikely that the ministry will agree to that due to pressure on fiscal deficit.
The subdued indirect tax collection following roll out of goods and services tax (GST) from July 1 last year has put pressure on the fiscal deficit, which has been pegged at 3.2 per cent of the GDP for 2017-18. The government recently raised borrowing target by additional Rs 500 billion for the current fiscal to meet the shortfall. According to industry body Ficci, there is a likelihood that demonetisation effects may linger on for some more months and hence there is a need to further boost demand and therefore, the government should consider revision of income tax slabs, by raising the income level on which peak tax rate would trigger. “This would improve purchasing power and create additional demand. For individual taxpayers, 30 per cent tax rate should be applicable only if the income is above Rs 2,000,000. Additionally, interest rates should be lowered to enable affordable finance for conducting business operation and expansion,” it said. Among other things, chambers have suggested re- introduction of the standard deduction for salaried employees to at least Rs 100,000 to ease the tax burden of them and keeping in mind the rate of inflation and purchasing power of the salaried individual, which is dependent on salary available for disbursement. Standard deduction, which was available to the salaried individuals on their taxable income, was abolished with effect from assessment year 2006-07.

Source: BS

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FRDI Bill 2017

, by indianmilitaryveterans

For those who have deposits in PSBs and may have cause to worry about the FRDI Bill ... 

Sudhir Vombatkere

**************************************

<http://www.thecitizen.in/index.php/en/NewsDetail/index/4/12728/FRDI-Hajamat-Dont-Worry-I-Wont-Shoot-Then-Why-the-Gun>

S.G.VOMBATKERE | 11 JANUARY, 2018

FRDIHajamat’: Don’t Worry I Won’t Shoot, Then Why the Gun

Finance Ministry’s assurances are illusory

The Financial Resolution and Deposit Insurance (FRDI) Bill 2017, is intended to resolve the financial distress that may develop in financial institutions (called “financial service providers”), specifically in banks.

It is also intended to provide a basis for providing depositors in banks with a degree of assurance that a specified minimum of deposits will be secure in the event of a financial crisis in the bank. The method of doing this is by raising a Resolution Corporation (RC) with appropriate powers.

RBI’s Financial Stability Report, 2016, mentions that by forming a Resolution Corporation (RC), India would be adhering to the Financial Stability Board’s (FSB) “Key Attributes of Effective Resolution Regimes for Financial Institutions” published in October 2014. FSB is an international organization established in 2009, to regulate international financial reform. So apparently, the FRDI Bill is intended to comply with international best practices in our national financial management.

Since this is about banks and their financial stability, it is well to note that banks survive by providing loans and earning interest on the loans provided. The capital for providing loans is from institutional and individual depositors, both small and large, who as creditors, earn interest on their deposits from the bank.

The bank uses its capital to provide loans. Simplistically put, when interest is not paid by a borrower, the bank takes measures to recover the interest and the principal. These measures include recovering the security based upon which the loan was provided, issuing legal notice to the guarantor to pay up, legally auctioning the borrower’s property to realise the moneys due, and taking civil or criminal action against the borrower.

If the amount due is not fully realised after auctioning the assets of the defaulting borrower, the unobtainable balance is “written-off” from the books with the concurrence of Ministry of Finance (MoF) and RBI. These methods are in use, but when the amounts are very large and the borrowers are politically very powerful, and in particular for public sector banks (PSBs), Government of India (GoI) provides money to the PSBs from public funds to “bail out” the bank. This is not unlike the case of a person arrested by police being bailed out of judicial custody by a friend who pays the bail money.

According to one estimate, GoI has been providing the big corporations tax holidays by excusing corporate income tax and excise and customs duties of around Rs.90 lakh-crores in the 11-years period 2005-2016, reflected as “Revenue foregone” in successive budgets. That is, revenue which would have been available for use in the health, education and social welfare sectors including MNREGA has been foregone, even while GoI rues lack of funds for these very sectors. To be fair, this is a legacy problem, but the present government has done little different from its predecessors.

Benefit to the corporate sector through “Revenue foregone” is merely one half of the dodgy benefit to the corporate world. The other half of the dodge is providing enormous loans to the beneficiaries of “Revenue foregone” in the name of boosting the industrial sector in pursuit of the Holy Grail of economic growth. And when these loans are not serviced, the bank either declares the loan as a non-performing asset (NPA) or else proffers another loan which is used to pay back the earlier loan (this is termed “re-financing”), so that the NPA is taken off the books.

Of course, the names of corporates which avail the holiday on corporate tax and excise and customs duties may not all figure among the names of defaulting borrowers, but many really big corporates benefit by tax holidays and also borrowing money which become NPAs which are then written-off. Impeccably smart footwork by successive finance ministers in consultation with their prime ministers, to keep the corporates in good spirits, using public money! Today, PSBs are finding it difficult to lend because around 40 large corporate groups owe around Rs.10 lakh-crore rupees.

That borrowings from PSBs are used by big corporates to finance mega-projects which cause population displacement, impinge adversely on the environment, and exacerbate global warming and climate change, is another dimension which is outside the scope of the present article.

With this mode of financial operation within the oversight of MoF and RBI, PSBs have NPAs which are treated as “losses incurred” and are a significantly dangerous proportion of their balance sheets. Thus, PSBs are in a position of precarious financial stability. These same PSBs are where you and me and umpteen others have invested our life savings as deposits, which are entered as liabilities in the balance sheet of the bank.

And so we come to the matter of resolution of financial crises and insurance for the deposits made in banks by members of the public, which is the reason for the FRDI Bill, 2017.

Journalist P.Sainath says: “A large part of the trillions in NPAs ... was run up by the wealthy who can’t be named due to ‘secrecy laws’ ”. Hence in the past, to resolve the problem of financial stability, GoI has bailed out banks, re-financing them by pumping in tax payers’ money. But that is not deemed sufficient in the present precarious financial condition of financial institutions, and hence the need for a bail-in option, described in FRDI Bill Section 52, to “absorb the losses incurred or reasonably expected to be incurred”.

The FRDI Bill caused fears among depositors principally due to the implications of the bail-in option available to the Resolution Corporation. However, Government made an attempt to allay these fears. [“Fears over FRDI Bill misplaced, says Government”; January 3, 2018; The Hindu; http://www.thehindu.com/news/national/fears-over-frdi-bill-misplaced-says-government/article22354147.ece"].

MoF is reported to have made the following statements to allay fears:

1. “Most certainly, it [bail-in] will not be used in case of a public sector bank as such a contingency is not likely to arise”.

2. “The implicit guarantee for solvency of public sector banks remains unaffected as the government remains committed to adequately capitalise them and improve their financial health.”

3. “Cancellation of the liability of the depositor beyond insured amount will be possible only with the prior consent of the depositor”.

4. “In case of injudicious and unreasonable exercise of bail-in power by the Resolution Corporation, for example, where the depositors of a bank get less value than in liquidation, such affected depositors will have the right to get compensation from the Resolution Corporation on an order of the National Company Law Tribunal”.

Basically, Government assures depositors that

- Depositors’ misgivings regarding the depositor protection in the context of the bail-in provisions, are entirely misplaced,

- bail-in has been proposed as merely one of the resolution tools in the event a financial firm is sought to be sustained by resolution,

- the bail-in clause will only be implemented with the consent of depositors, and

- it reiterates its implicit guarantee for the solvency of PSBs.

Let us consider these assurances together with the quoted statements of MoF.. First off, the depositors concern is precisely why at all the bail-in provision should be made available – at least in the case of PSBs – when the cause for resolution is primarily NPAs, mostly due to default of the big borrowers, possibly in collusion or connivance with bank officials and MoF officials. Assuring a depositor that bail-in will not be used as such a contingency is not likely to arise, is akin to holding a gun to a depositor’s head and assuring the depositor, “Don’t worry, I won’t shoot”.

Next, MoF’s assurance that the bail-in clause will only be implemented with a depositor’s consent is patently illusory, because not a single depositor in all of India would be crazy enough to consent to MoF taking away deposits made with his hard-earned money representing his life savings, to settle the banks NPAs in the resolution process.

It is bad enough that the bail-out process using tax-payers’ money to balance the books of banks which have huge NPAs is being used, instead of recovering dues from borrowers and punishing colluders and connivers among bank staff and MoF staff.

Stating that if the RC injudiciously or unreasonably exercises its bail-in powers, the “... affected depositors will have the right to get compensation from the Resolution Corporation on an order of the National Company Law Tribunal” involves a decision concerning judiciousness and reasonableness which is outside the depositor’s control. Several questions arise at this point.

Even if the decision favours the depositor, would this apply to all the millions of depositors, how would they know the decision and demand compensation, what is the quantum and process of compensation, what is the depositor’s access to the RC and NCLT, how will the inevitable corruption in the compensation process be handled, etc..

Saying: “Most certainly, it [bail-in] will not be used in case of a public sector bank as such a contingency is not likely to arise”, containing the phrases “most certainly” and “not likely to arise” at the start and finish of the very esame sentence, bringing the “Don’t worry, I won’t shoot” message to mind. If the man with the bail-in ‘gun’ assures that he will not pull the trigger, what indeed is the need for the bail-in ‘gun’?

The statements: “The implicit guarantee for solvency of public sector banks remains unaffected as the government remains committed to adequately capitalise them and improve their financial health “(presumably by bail-out using tax-payers’ money) and also that bail-in “... will not be used in case of a public sector bank as such a contingency is not likely to arise”, do not create confidence, but on the other hand cause apprehension whether these are duplicitous statements.

In the FRDI Bill, "haircut" is one of the terms used concerning bail-in. It means a percentage reduction in the amount that is payable to the creditors (depositors) as a means of adjusting for losses due to non-recovery of NPAs. It is piquant that the word “hajamat” is Hindi for “haircut”, with the alternate meaning of fleecing somebody, with words or phrases carrying precisely the same double meaning in other Indian languages. The FRDI Bill does not inspire public confidence.

____________________________________________________________________________________

AIM of the FRDI BILL: To provide for # the resolution of certain categories of financial service providers in distress; # the deposit insurance to consumers of certain categories of financial services; # designation of systemically important financial institutions; and # establishment of a Resolution Corporation for protection of consumers of specified service providers and of public funds for ensuring the stability and resilience of the financial system and for matters connected therewith or incidental thereto.

*********************

The bail-in clause in Sec 52 of the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017, reads as follows:

52. (1) Notwithstanding anything in section 49, the Corporation may, in consultation with the appropriate regulator, if it is satisfied that it necessary to bail-in a specified service provider to absorb the losses incurred, or reasonably expected to be incurred, by the specified service provider and to provide a measure of capital so as to enable it to carry on business for a reasonable period and maintain market confidence, take an action under this section by a bail-in instrument or a scheme to be made under section 48.

(2) The bail-in instrument or scheme referred to in sub-section (1) shall be in such form and manner as may be specified by regulations made by the Corporation, and contain—

(a) a bail-in provision; or

(b) a provision for the purposes of or in connection with any bail-in provision made by that instrument or by another instrument.

(3) Subject to sub-section (5), a bail-in provision means any or a combination of the following, namely:—

(a) a provision cancelling a liability owed by a specified service provider;

(b) a provision modifying or changing the form of a liability owed by a specified service provider; and

(c) a provision that a contract or agreement under which a specified service provider has a liability shall have effect as if a specified right had been exercised under it.

(4) The Corporation shall, by regulations, specify the liabilities or classes of liabilities of a specified service provider, which may be subject to bail-in.

(5) The appropriate regulator may, in consultation with the Corporation, require specified service providers or classes of specified service providers to maintain liabilities that may be subject to bail-in and the terms and conditions for such liabilities to contain a provision to the effect that such liabilities are subject to bail-in.

(6) In addition to the actions laid down in sub-section (3), the Corporation may, in consultation with the appropriate regulator, take the following actions in respect of a central counterparty, namely:—

(a) direct the haircutting of the collaterals and margins;

(b) direct the issuance of equity to the creditors.

Explanation.—For the purposes of this sub-section, “haircut” shall have the same meaning as assigned to it in section 44.

(7) The bail-in instrument or scheme under this section shall not affect—

(a) any liability owed by a specified service provider to the depositors to the extent such deposits are covered by deposit insurance;

(b) any liability that the specified service provider has by virtue of holding client assets.

Explanation.—In this clause, the expression, “client assets” shall include such assets as may be specified by regulations made by the appropriate regulator;

(c) any liability of original maturities upto seven days;

(d) any obligation to a central counter party;

(e) any liability, so far as it is secured;

(f) any liability owed to employees or workmen including pension liabilities of the specified service provider except for liabilities designated as performance based incentive under section 51;

(g) any transaction covered under section 47; and

(h) such other liabilities as may be specified by regulations made by the appropriate regulator in consultation with the Corporation and the Central Government.

(8) The Corporation shall forward the bail-in instrument made under this section to the Central Government together with a report in such form and manner as may be prescribed, which shall contain—

(a) the reasons why a bail-in instrument under this section was made;

(b) the effect of the bail-in instrument; and

(c) the deviations, if any, from the requirements of sub-section (3) and the reasons therefor.

(9) A copy of the report received under sub-section (8) shall, as soon as may be after it is received by the Central Government, be laid before each House of Parliament.

(10) The provisions of sub-sections (3) and (6) of section 49 shall apply, mutatis mutandis, to the bail-in instrument or scheme under this section.

___________________________________________________________________________________­_______________

Major General S.G. Vombatkere, VSM, retired as Additional DG Discipline & Vigilance in Army HQ AG's Branch. His area of interest is strategic and development-related issues.




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Disability pension and compensation to ex servicemen and cadets

, by indianmilitaryveterans

GOVERNMENT OF INDIA MINISTRY OF DEFENCE RAJYA SABHA

QUESTION NO 1448
ANSWERED ON 01.01.2018

Disability pension and compensation to ex servicemen and cadets 1448 Shri Vivek Gupta Will the Minister of DEFENCE be pleased to state :-

(a) the details of the disability pension, accruing to the ex-servicemen, during 2014-17, rank-wise;

(b) whether Government has reduced the disability pension to ex-servicemen for any rank during 2014-17;

(c) if so, the details thereof and the rationale for the cuts in disability pension; and

(d) whether it is a fact that trainees of commissioned Group A (Class I) level posts are not given proper disability or family pension on death and only “monthly ex-gratia payment” is made since they are not considered as Government employees and if so, the steps taken by the Ministry to change this scenario?

ANSWER
MINISTER OF STATE IN THE MINISTRY OF DEFENCE DR. SUBHASH BHAMRE

(a) Disability Pension in cases of invalidment is granted to Armed Forces Personnel irrespective of qualifying service rendered which consists of service element and disability element. Armed Forces personnel who are retired / discharged with disability which is attributable to or aggravated by military service are also allowed disability element in addition to their service / retiring pension. With effect from 01.01.2006, the Disability Element is paid based on 30% of last emoluments drawn for 100% disability which is reduced pro-rata for lower percentages of disability. Benefit of broad banding of percentage of disability was earlier allowed only for those invalided out from service. However, vide Ministry of Defence orders dated 4th and 5th September, 2017 the benefit of broad banding of percentage of disability has been extended to cases of retirement / discharge from service with disability of 20% or more.

(b) No, Sir.

(c) Does not arise.

(d) Cadets during the entire duration of training in service academies i.e. during training period of Indian Military Academy (IMA) and Officers Training Academy (OTA) are entitled to stipend. The period of training is not treated as Commissioned Service. Cadets are not entitled to Disability Pension. The scheme for grant of monthly ex-gratia awards in cases of death / disablement of Cadets (Direct) due to causes attributable to or aggravated by Military Training was introduced vide Ministry of Defence letter dated 16.04.1996 which was applicable with effect from 01.01.1986. Rates of Ex-gratia awards have been revised by each Pay Commission.

The rates notified vide Ministry of Defence letter dated 04.09.2017, are as follows:- In case of disablement:– Monthly Ex-gratia amount – Rs.9,000/-pm. Monthly Ex-gratia disability award – Rs.16,200/-pm for 100% disability, subject to pro-rata reduction for lower percentages of disability. Constant Attendance Allowance – Rs.6,750/-pm, if applicable. In case of death:- Monthly Ex-gratia amount – Rs.9,000/-pm. Ex-gratia lump sum compensation – Rs.12.5 lakhs.

Source : Rajya Sabha

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Annual Budget 2018 – Will income tax limit be raised to Rs. 3 or 5 lakhs?

, by indianmilitaryveterans

Budget 2018 – Will income tax limit be raised to Rs. 3 or 5 lakhs?

“The tax slab is expected to be raised in favour of government employees”

According to information available, the annual budget, to be presented by Finance Minister Arun Jaitley on February 1, could have some sops for the middle-class families. Post the Seventh Pay Commission, most government servants now find themselves within the tax slab. For a number of years now, government servants have been demanding that the tax-exemption slab be raised to Rs. 5 lakhs.
The current exemption stands at Rs. 2.5 lakhs. There is a five percent tax on the income in the Rs. 2.5 lakhs to 5 lakhs bracket. There are prevalent talks that the government could revise the slabs. This could come as a big boon for middle income groups, especially the salaried class who are suffering due to acute inflation. No changes were made in the tax slab last year, but the tax of 10 percent on the Rs. 2.5 lakhs to 5 lakhs slab was brought down to five percent. The budget, to be presented next month, is expected to reduce the tax on the Rs. 5 lakhs to Rs. 10 lakhs slab to 10 percent (it currently stands at 20 percent).

This could spell huge relief to the salaried class. Similarly, the tax on the Rs. 10 lakhs to Rs. 20 lakhs slab could be reduced to 20 percent (currently stands at 30 percent). A tax of 30 percent is collected on the amount exceeding Rs. 20 lakhs. Tax rate on this slab is the lowest in India when compared to most other countries. There is currently no exclusive tax slab for those earning between Rs. 10 lakhs and 20 lakhs, and those earning more than Rs. 10 lakhs automatically end up paying 30 percent in taxes. The income tax department could raise the tax slab in order to provide relief to the salaried class that continues to suffer from the rise in prices of essential commodities due to inflation.
There are, however, some unconfirmed reports that claim that the tax slab is not likely to be raised to Rs. 5 lakhs.

Rates of tax for every individual, resident in India, who is of the age of sixty years or more but less than eighty years at any time during the financial year:

In case of every individual being a resident in India, who is of the age of eighty years or more at any time during the financial year:

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CSD PRICE LIST

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