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Key Highlights of Union Budget 2019-20

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Indian Military Veterans

PIB : Key Highlights of Union Budget 2019-20

Press Information Bureau
Government of India
Ministry of Finance
05-July-2019
Key Highlights of Union Budget 2019-20
The Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman made her maiden Budget Speech today and presented the Union Budget 2019-20 before the Parliament. The key highlights of Union Budget 2019 are as follows:
10-point Vision for the decade
  • Building Team India with Jan Bhagidari: Minimum Government Maximum Governance.
  • Achieving green Mother Earth and Blue Skies through a pollution-free India.
  • Making Digital India reach every sector of the economy.
  • Launching Gaganyan, Chandrayan, other Space and Satellite programmes.
  • Building physical and social infrastructure.
  • Water, water management, clean rivers.
  • Blue Economy.
  • Self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables.
  • Achieving a healthy society via Ayushman Bharat, well-nourished women & children, safety of citizens.
  • Emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices under Make in India.
Towards a 5 Trillion Dollar Economy
  • “People’s hearts filled with Aasha (Hope), Vishwas (Trust), Aakansha (Aspirations)”, says FM.
  • Indian economy to become a 3 trillion dollar economy in the current year.
  • Government aspires to make India a 5 trillion dollar economy.
  • “India Inc. are India’s job-creators and nation’s wealth-creators”, says FM.
  • Need for investment in:
    Infrastructure.
    Digital economy.
    Job creation in small and medium firms.
  • Initiatives to be proposed for kick-starting the virtuous cycle of investments.
  • Common man’s life changed through MUDRA loans for ease of doing business.
  • Measures related to MSMEs:
    Pradhan Mantri Karam Yogi Maandhan Scheme
  • Pension benefits to about three crore retail traders & small shopkeepers with annual turnover less than Rs. 1.5 crore.
  • Enrolment to be kept simple, requiring only Aadhaar, bank account and a self-declaration.
    Rs. 350 crore allocated for FY 2019-20 for 2% interest subvention (on fresh or incremental loans) to all GST-registered MSMEs, under the Interest Subvention Scheme for MSMEs.
    Payment platform for MSMEs to be created to enable filing of bills and payment thereof, to eliminate delays in government payments.
  • India’s first indigenously developed payment ecosystem for transport, based on National Common Mobility Card (NCMC) standards, launched in March 2019.
  • Inter-operable transport card runs on RuPay card and would allow the holders to pay for bus travel, toll taxes, parking charges, retail shopping.
  • Massive push given to all forms of physical connectivity through:
    Pradhan Mantri Gram Sadak Yojana.
    Industrial Corridors, Dedicated Freight Corridors.
    Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes.
  • State road networks to be developed in second phase of Bharatmala project.
  • Navigational capacity of Ganga to be enhanced via multi modal terminals at Sahibganj and Haldia and a navigational lock at Farakka by 2019-20, under Jal Marg Vikas Project.
  • Four times increase in next four years estimated in the cargo volume on Ganga, leading to cheaper freight and passenger movement and reducing the import bill.
  • Rs. 50 lakh crore investment needed in Railway Infrastructure during 2018-2030.
  • Public-Private-Partnership proposed for development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.
  • 657 kilometers of Metro Rail network has become operational across the country.
  • Policy interventions to be made for the development of Maintenance, Repair and Overhaul (MRO), to achieve self- reliance in aviation segment.
  • Regulatory roadmap for making India a hub for aircraft financing and leasing activities from Indian shores, to be laid by the Government.
  • Outlay of Rs. 10,000 crore for 3 years approved for Phase-II of FAME Scheme.
  • Upfront incentive proposed on purchase and charging infrastructure, to encourage faster adoption of Electric Vehicles.
  • Only advanced-battery-operated and registered e-vehicles to be incentivized under FAME Scheme.
  • National Highway Programme to be restructured to ensure a National Highway Grid, using a financeable model.
  • Power at affordable rates to states ensured under ‘One Nation, One Grid’.
  • Blueprints to be made available for gas grids, water grids, i-ways, and regional airports.
  • High Level Empowered Committee (HLEC) recommendations to be implemented:
    Retirement of old & inefficient plants.
    Addressing low utilization of gas plant capacity due to paucity of Natural Gas.
  • Cross subsidy surcharges, undesirable duties on open access sales or captive generation for industrial and other bulk power consumers to be removed under Ujjwal DISCOM Assurance Yojana (UDAY).
  • Package of power sector tariff and structural reforms to be announced soon.
    Reform measures to be taken up to promote rental housing.
  • Model Tenancy Law to be finalized and circulated to the states.
  • Joint development and concession mechanisms to be used for public infrastructure and affordable housing on land parcels held by the Central Government and CPSEs.

  • Measures to enhance the sources of capital for infrastructure financing:
    Credit Guarantee Enhancement Corporation to be set up in 2019-2020.
    Action plan to be put in place to deepen the market for long term bonds with focus on infrastructure.
    Proposed transfer/sale of investments by FIIs/FPIs (in debt securities issued by IDF-NBFCs) to any domestic investor within the specified lock-in period.
  • Measures to deepen bond markets:
    Stock exchanges to be enabled to allow AA rated bonds as collaterals.
    User-friendliness of trading platforms for corporate bonds to be reviewed.
  • Social stock exchange:
    Electronic fund raising platform under the regulatory ambit of SEBI.
    Listing social enterprises and voluntary organizations.
    To raise capital as equity, debt or as units like a mutual fund.
  • SEBI to consider raising the threshold for minimum public shareholding in the listed companies from 25% to 35%.
  • Know Your Customer (KYC) norms for Foreign Portfolio Investors to be made more investor friendly.
  • Government to supplement efforts by RBI to get retail investors to invest in government treasury bills and securities, with further institutional development using stock exchanges.
  • Measures to make India a more attractive FDI destination:
    FDI in sectors like aviation, media (animation, AVGC) and insurance sectors can be opened further after multi-stakeholder examination.
    Insurance Intermediaries to get 100% FDI.
    Local sourcing norms to be eased for FDI in Single Brand Retail sector.
  • Government to organize an annual Global Investors Meet in India, using National Infrastructure Investment Fund (NIIF) as an anchor to get all three sets of global players (pension, insurance and sovereign wealth funds).
  • Statutory limit for FPI investment in a company is proposed to be increased from 24% to sectoral foreign investment limit. Option to be given to the concerned corporate to limit it to a lower threshold.
  • FPIs to be permitted to subscribe to listed debt securities issued by ReITs and InvITs.
  • NRI-Portfolio Investment Scheme Route is proposed to be merged with the Foreign Portfolio Investment Route.
  • Cumulative resources garnered through new financial instruments like Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs) as well as models like Toll-Operate-Transfer (ToT) exceed Rs. 24,000 crore.

  • New Space India Limited (NSIL), a PSE, incorporated as a new commercial arm of Department of Space.
  • To tap the benefits of the Research & Development carried out by ISRO like commercialization of products like launch vehicles, transfer to technologies and marketing of space products.
Direct Taxes
  • Tax rate reduced to 25% for companies with annual turnover up to Rs. 400 crore
  • Surcharge increased on individuals having taxable income from Rs. 2 crore to Rs. 5 crore and Rs. 5 crore and above.
  • India’s Ease of Doing Business ranking under the category of ‘paying taxes’ jumped from 172 in 2017 to 121 in the 2019.
  • Direct tax revenue increased by over 78% in past 5 years to Rs. 11.37 lakh crore
Tax Simplification and Ease of living – making compliance easier by leveraging technology:
  • Interchangeability of PAN and Aadhaar
    Those who don’t have PAN can file tax returns using Aadhaar.
    Aadhaar can be used wherever PAN is required.
  • Pre-filling of Income-tax Returns for faster, more accurate tax returns
    Pre-filled tax returns with details of several incomes and deductions to be made available.
    Information to be collected from Banks, Stock exchanges, mutual funds etc.
  • Faceless e-assessment
    Faceless e-assessment with no human interface to be launched.
    To be carried out initially in cases requiring verification of certain specified transactions or discrepancies.
Affordable housing
  • Additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st March, 2020 for purchase of house valued up to Rs. 45 lakh.
 Overall benefit of around Rs. 7 lakh over loan period of 15 years.
Boost to Electric Vehicles
  • Additional income tax deduction of Rs. 1.5 lakh on interest paid on electric vehicle loans.
  • Customs duty exempted on certain parts of electric vehicles.
Other Direct Tax measures
  • Simplification of tax laws to reduce genuine hardships of taxpayers:
    Higher tax threshold for launching prosecution for non-filing of returns
    Appropriate class of persons exempted from the anti-abuse provisions of Section 50CA and Section 56 of the Income Tax Act.
Relief for Start-ups
  • Capital gains exemptions from sale of residential house for investment in start-ups extended till FY21.
  • ‘Angel tax’ issue resolved- start-ups and investors filing requisite declarations and providing information in their returns not to be subjected to any kind of scrutiny in respect of valuations of share premiums.
  • Funds raised by start-ups to not require scrutiny from Income Tax Department
    E-verification mechanism for establishing identity of the investor and source of funds.
  • Special administrative arrangements for pending assessments and grievance redressal
    No inquiry in such cases by the Assessing Officer without obtaining approval of the supervisory officer.
  • No scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.
  • Relaxation of conditions for carry forward and set off of losses.
NBFCs
  • Interest on certain bad or doubtful debts by deposit taking as well as systemically important non-deposit taking NBFCs to be taxed in the year in which interest is actually received.
International Financial Services Centre (IFSC)
  • Direct tax incentives proposed for an IFSC:
    100 % profit-linked deduction in any ten-year block within a fifteen-year period.
    Exemption from dividend distribution tax from current and accumulated income to companies and mutual funds.
    Exemptions on capital gain to Category-III Alternative Investment Funds (AIFs).
    Exemption to interest payment on loan taken from non-residents.
Securities Transaction Tax (STT)
  • STT restricted only to the difference between settlement and strike price in case of exercise of options.
Indirect Taxes
Make In India
  • Basic Customs Duty increased on cashew kernels, PVC, tiles, auto parts, marble slabs, optical fibre cable, CCTV camera etc.
  • Exemptions from Custom Duty on certain electronic items now manufactured in India withdrawn.
  • End use based exemptions on palm stearin, fatty oils withdrawn.
  • Exemptions to various kinds of papers withdrawn.
  • 5% Basic Custom Duty imposed on imported books.
  • Customs duty reduced on certain raw materials such as:
    Inputs for artificial kidney and disposable sterilised dialyser and fuels for nuclear power plants etc.
    Capital goods required for manufacture of specified electronic goods.
Defence
  • Defence equipment not manufactured in India exempted from basic customs duty
Other Indirect Tax provisions
  • Export duty rationalised on raw and semi-finished leather
  • Increase in Special Additional Excise Duty and Road and Infrastructure Cess each by Rs. 1 per litre on petrol and diesel
  • Custom duty on gold and other precious metals increased
  • Legacy Dispute Resolution Scheme for quick closure of pending litigations in Central Excise and Service tax from pre-GST regime
Grameen Bharat / Rural India
  • Ujjwala Yojana and Saubhagya Yojana have transformed the lives of every rural family, dramatically improving ease of their living.
  • Electricity and clean cooking facility to all willing rural families by 2022.
  • Pradhan Mantri Awas Yojana – Gramin (PMAY-G) aims to achieve “Housing for All” by 2022:
    Eligible beneficiaries to be provided 1.95 crore houses with amenities like toilets, electricity and LPG connections during its second phase (2019-20 to 2021-22).
  • Pradhan Mantri Matsya Sampada Yojana (PMMSY)
    A robust fisheries management framework through PMMSY to be established by the Department of Fisheries.
    To address critical gaps in the value chain including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.
  • Pradhan Mantri Gram Sadak Yojana (PMGSY)
    Target of connecting the eligible and feasible habitations advanced from 2022 to 2019 with 97% of such habitations already being provided with all weather connectivity.
    30,000 kilometers of PMGSY roads have been built using Green Technology, Waste Plastic and Cold Mix Technology, thereby reducing carbon footprint.
    1,25,000 kilometers of road length to be upgraded over the next five years under PMGSY III with an estimated cost of Rs. 80,250 crore.
  • Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI)
    Common Facility Centres (CFCs) to be setup to facilitate cluster based development for making traditional industries more productive, profitable and capable for generating sustained employment opportunities.
    100 new clusters to be setup during 2019-20 with special focus on Bamboo, Honey and Khadi, enabling 50,000 artisans to join the economic value chain.
  • Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship’ (ASPIRE) consolidated.
    80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs) to be setup in 2019-20.
    75,000 entrepreneurs to be skilled in agro-rural industry sectors.
  • Private entrepreneurships to be supported in driving value-addition to farmers’ produce from the field and for those from allied activities.
  • Dairying through cooperatives to be encouraged by creating infrastructure for cattle feed manufacturing, milk procurement, processing & marketing.
  • 10,000 new Farmer Producer Organizations to be formed, to ensure economies of scale for farmers.
  • Government to work with State Governments to allow farmers to benefit from e-NAM.
  • Zero Budget Farming in which few states’ farmers are already being trained to be replicated in other states.
  • India’s water security
    New Jal Shakti Mantralaya to look at the management of our water resources and water supply in an integrated and holistic manner
    Jal Jeevan Mission to achieve Har Ghar Jal (piped water supply) to all rural households by 2024
    To focus on integrated demand and supply side management of water at the local level.
    Convergence with other Central and State Government Schemes to achieve its objectives.
    1592 critical and over exploited Blocks spread across 256 District being identified for the Jal Shakti Abhiyan.
    Compensatory Afforestation Fund Management and Planning Authority (CAMPA) fund can be used for this purpose.
  • Swachh Bharat Abhiyan
    9.6 crore toilets constructed since Oct 2, 2014.
    More than 5.6 lakh villages have become Open Defecation Free (ODF).
    Swachh Bharat Mission to be expanded to undertake sustainable solid waste management in every village.
  • Pradhan Mantri Gramin Digital Saksharta Abhiyan,
    Over two crore rural Indians made digitally literate.
    Internet connectivity in local bodies in every Panchayat under Bharat-Net to bridge rural-urban divide.
    Universal Obligation Fund under a PPP arrangement to be utilized for speeding up Bharat-Net.
Shahree Bharat/Urban India
  • Pradhan Mantri Awas Yojana – Urban (PMAY-Urban)-
    Over 81 lakh houses with an investment of about Rs. 4.83 lakh crore sanctioned of which construction started in about 47 lakh houses.
    Over 26 lakh houses completed of which nearly 24 lakh houses delivered to the beneficiaries.
    Over 13 lakh houses so far constructed using new technologies.
  • More than 95% of cities also declared Open Defecation Free (ODF).
  • Almost 1 crore citizens have downloaded Swachhata App.
  • Target of achieving Gandhiji’s resolve of Swachh Bharat to make India ODF by 2nd October 2019.
    To mark this occasion, the Rashtriya Swachhta Kendra to be inaugurated at Gandhi Darshan, Rajghat on 2nd October, 2019.
    Gandhipedia being developed by National Council for Science Museums to sensitize youth and society about positive Gandhian values.
  • Railways to be encouraged to invest more in suburban railways through SPV structures like Rapid Regional Transport System (RRTS) proposed on the Delhi-Meerut route.
  • Proposal to enhance the metro-railway initiatives by:
    Encouraging more PPP initiatives.
    Ensuring completion of sanctioned works.
    Supporting transit oriented development (TOD) to ensure commercial activity around transit hubs.
Youth
  • New National Education Policy to be brought which proposes
    Major changes in both school and higher education
    Better Governance systems
    Greater focus on research and innovation.
  • National Research Foundation (NRF) proposed
    To fund, coordinate and promote research in the country.
    To assimilate independent research grants given by various Ministries.
    To strengthen overall research eco-system in the country
    This would be adequately supplemented with additional funds.
  • Rs. 400 crore provided for “World Class Institutions”, for FY 2019-20, more than three times the revised estimates for the previous year.
  • ‘Study in India’ proposed to bring foreign students to study in Indian higher educational institutions.
  • Regulatory systems of higher education to be reformed comprehensively:
    To promote greater autonomy.
    To focus on better academic outcomes.
  • Draft legislation to set up Higher Education Commission of India (HECI), to be presented.
  • Khelo India Scheme to be expanded with all necessary financial support.
  • National Sports Education Board for development of sportspersons to be set up under Khelo India, to popularize sports at all levels
  • To prepare youth for overseas jobs, focus to be increased on globally valued skill-sets including language training, AI, IoT, Big Data, 3D Printing, Virtual Reality and Robotics.
  • Set of four labour codes proposed, to streamline multiple labour laws to standardize and streamline registration and filing of returns.
  • A television program proposed exclusively for and by start-ups, within the DD bouquet of channels.
  • Stand-Up India Scheme to be continued for the period of 2020-25. The Banks to provide financial assistance for demand based businesses.
Ease of Living
  • About 30 lakh workers joined the Pradhan Mantri Shram Yogi Maandhan Scheme that provides Rs. 3,000 per month as pension on attaining the age of 60 to workers in unorganized and informal sectors.
  • Approximately 35 crore LED bulbs distributed under UJALA Yojana leading to cost saving of Rs. 18,341 crore annually.
  • Solar stoves and battery chargers to be promoted using the approach of LED bulbs mission.
  • A massive program of railway station modernization to be launched.
Naari Tu Narayani/Women
  • Approach shift from women-centric-policy making to women-led initiatives and movements.
  • A Committee proposed with Government and private stakeholders for moving forward on Gender budgeting.
  • SHG:
    Women SHG interest subvention program proposed to be expanded to all districts.
    Overdraft of Rs. 5,000 to be allowed for every verified women SHG member having a Jan Dhan Bank Account.
    One woman per SHG to be eligible for a loan up to Rs. 1 lakh under MUDRA Scheme.
India’s Soft Power
  • Proposal to consider issuing Aadhaar Card for NRIs with Indian Passports on their arrival without waiting for 180 days.
  • Mission to integrate traditional artisans with global markets proposed, with necessary patents and geographical indicators.
  • 18 new Indian diplomatic Missions in Africa approved in March, 2018, out of which 5 already opened. Another 4 new Embassies intended in 2019-20.
  • Revamp of Indian Development Assistance Scheme (IDEAS) proposed.
  • 17 iconic Tourism Sites being developed into model world class tourist destinations.
  • Present digital repository aimed at preserving rich tribal cultural heritage, to be strengthened.
Banking and Financial Sector
  • NPAs of commercial banks reduced by over Rs. 1 lakh crore over the last year.
  • Record recovery of over Rs. 4 lakh crore effected over the last four years.
  • Provision coverage ratio at its highest in seven years.
  • Domestic credit growth increased to 13.8%.
  • Measures related to PSBs:
    Rs. 70,000 crore proposed to be provided to PSBs to boost credit.
    PSBs to leverage technology, offering online personal loans and doorstep banking, and enabling customers of one PSBs to access services across all PSBs.
    Steps to be initiated to empower accountholders to have control over deposit of cash by others in their accounts.
  • Reforms to be undertaken to strengthen governance in PSBs.
  • Measures related to NBFCs:
    Proposals for strengthening the regulatory authority of RBI over NBFCs to be placed in the Finance Bill.
    Requirement of creating a Debenture Redemption Reserve will be done away with to allow NBFCs to raise funds in public issues.
    Steps to allow all NBFCs to directly participate on the TReDS platform.
  • Return of regulatory authority from NHB to RBI proposed, over the housing finance sector.
  • Rs. 100 lakh crore investment in infrastructure intended over the next five years. Committee proposed to recommend the structure and required flow of funds through development finance institutions.
  • Steps to be taken to separate the NPS Trust from PFRDA.
  • Reduction in Net Owned Fund requirement from Rs. 5,000 crore to Rs. 1,000 crore proposed:
    To facilitate on-shoring of international insurance transactions.
    To enable opening of branches by foreign reinsurers in the International Financial Services Centre.
  • Measures related to CPSEs:
    Target of Rs. 1, 05,000 crore of disinvestment receipts set for the FY 2019-20.
    Government to reinitiate the process of strategic disinvestment of Air India, and to offer more CPSEs for strategic participation by the private sector.
    Government to undertake strategic sale of PSUs and continue to consolidate PSUs in the non-financial space.
    Government to consider going to an appropriate level below 51% in PSUs where the government control is still to be retained, on case to case basis.
    Present policy of retaining 51% Government stake to be modified to retaining 51% stake inclusive of the stake of Government controlled institutions.
    Retail participation in CPSEs to be encouraged.
    To provide additional investment space:
  • Government to realign its holding in CPSEs
  • Banks to permit greater availability of its shares and to improve depth of its market.
    Government to offer an investment option in ETFs on the lines of Equity Linked Savings Scheme (ELSS).
  • Government to meet public shareholding norms of 25% for all listed PSUs and raise the foreign shareholding limits to maximum permissible sector limits for all PSU companies which are part of Emerging Market Index.
  • Government to raise a part of its gross borrowing program in external markets in external currencies. This will also have beneficial impact on demand situation for the government securities in domestic market.
  • New series of coins of One Rupee, Two Rupees, Five Rupees, Ten Rupees and Twenty Rupees, easily identifiable to the visually impaired to be made available for public use shortly.
Digital Payments
  • TDS of 2% on cash withdrawal exceeding Rs. 1 crore in a year from a bank account
  • Business establishments with annual turnover more than Rs. 50 crore shall offer low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants.
Mega Investment in Sunrise and Advanced Technology Areas

Scheme to invite global companies to set up mega-manufacturing plants in areas such as Semi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Computer Servers, Laptops, etc
Investment linked income tax exemptions to be provided along with indirect tax benefits.
Achievements during 2014-19

  • 1 trillion dollar added to Indian economy over last 5 years (compared to over 55 years taken to reach the first trillion dollar).
  • India is now the 6th largest economy in the world, compared to 11th largest five years ago.
  • Indian economy is globally the 3rd largest in Purchasing Power Parity (PPP) terms.
  • Strident commitment to fiscal discipline and a rejuvenated Centre-State dynamic provided during 2014-19.
  • Structural reforms in indirect taxation, bankruptcy and real estate carried out.
  • Average amount spent on food security per year almost doubled during 2014-19 compared to 2009-14.
  • Patents issued more than trebled in 2017-18 as against the number in 2014.
  • Ball set rolling for a New India, planned and assisted by the NITI Aayog.
Roadmap for future
  • Simplification of procedures.
  • Incentivizing performance.
  • Red-tape reduction.
  • Making the best use of technology.
  • Accelerating mega programmes and services initiated and delivered so far.
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Source: PIB

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, by indianmilitaryveterans

Indian Military Veterans
Dear All,

Please read the MHA letter to CRPF, asking them to implement NFU for CRPF officers. 

Why is Govt opposing grant of NFU to the Fauj? Who makes the decisions re Fauj?

Obviously serving soldiers cannot speak, so will Veterans speak, or will we be hobbled by those who advise reticence? What is the role of erstwhile RMs. what is the role of PM in not granting NFU to the Fauj (and opposing its grant in Court) even while granting it so easily and readily to CRPF?

Jai Hind!

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Row after Army says disability pension to be taxed to stop exploitation

, by indianmilitaryveterans

Indian Military Veterans

Row after Army says disability pension to be taxed to stop exploitation

A medical downgrade entitles a soldier to better retirement benefits. On average for the same rank, a disability pension can be 20 to 50% more than a normal one, plus tax exemption.

india Updated: Jul 04, 2019 08:38 IST
Rahul Singh
Rahul Singh
Hindustan Times, New Delhi

The army’s explanation of why taxing the disability pension was necessary came after finance minister Nirmala Sitharaman’s office on Tuesday tweeted a letter that said unscrupulous personnel gained from disability benefits. (ANI file photo)
The row over the army’s decision to impose tax on disability pension drawn by soldiers has deepened, with the force insisting that the move is necessary to check misuse and several retired officers and experts objecting to the benefit being withdrawn.
The army’s main argument is that the force is witnessing a worrying trend of more soldiers seekingdisability pension for monetary benefits even when their medical condition is an outcome of their lifestyle. But those opposed to the move are demanding that it be reversed as genuine disability cases should not be made to suffer due to the actions of a few unscrupulous people.
A medical downgrade entitles a soldier to better retirement benefits. On average for the same rank, a disability pension can be 20 to 50% more than a normal one, plus tax exemption.
As the controversy over disability pension peaked, the army on Tuesday wrote a series of tweets along with an explanatory note on the issue highlighting why the move was necessary.
“Over the years, broad-banding and compensation awarded for disability with income tax exemption has led to rise in personnel seeking disability, even for life style diseases. The trend is worrisome that too when the security challenges to the Nation are on the rise,” the army tweeted, drawing angry reactions from veterans on the micro-blogging website.
The army’s tweets came after finance minister Nirmala Sitharaman tweeted the disability pension note with the heading ‘Response of the Armed Forces on the issue of taxability of disability pension.”
It is not an impulsive move but a well-thought out decision to curb misuse after a detailed internal study, two senior officials said on Wednesday on the condition of anonymity. “Alarmed over the rising number of soldiers seeking disability, the army conducted a study on how to disincentivize disability pensions,” said one of the officials cited above.
Cases of soldiers with lifestyle diseases seeking disability pension have come to light in recent years and this is not the same as getting wounded or disabled in the line of duty, said the second official.
“The army is concerned for all personnel who are invalidated out of service in combat conditions or otherwise, and need additional support and discourages those who seek financial gains through their disabilities,” the army tweeted on Tuesday.
Some experts said the move was unwarranted and the problem, exaggerated.
“More than the exemption part of it, I am worried how disabilities in the military are being demonised to justify the action. Disabilities such as heart disease etc are covered under rules as affected by stress and strain of service and we should rather take steps to care for such personnel and improve the health profile of the army. Instances of manipulation are also grossly exaggerated,” said Major Navdeep Singh (retd), a lawyer who was on the expert committee set up by the defence ministry in 2015 to reduce military litigation.
Former Northern Army commander Lieutenant General BS Jaswal (retd) said some people may have misused the provisions of disability pension but that should not result in genuine cases losing out on benefits. “People who are abusing the provisions have to be held accountable. This trend of soldiers claiming disability pension towards the fag-end of their careers needs to be curbed. But the nation needs to take care of soldiers disabled in the line of duty and they should be entitled to tax benefits,” said Jaswal.
Army officials said claims for disability pensions have risen significantly following the implementation of the sixth pay commission report in 2006 that enhanced benefits.
Lieutenant General BK Chopra (retd), who headed the armed forces medical services during 2014-16, said a scrutiny of records during his tenure showed that before 2006 hardly any of the top officers claimed disability pension but by 2015, almost 21% of them were claiming benefits.
“A distinction has to drawn between disability attributed or aggravated by military service and lifestyle diseases that are manageable,” he said on Wednesday.

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Why disability pension tax upsets veterans

, by indianmilitaryveterans

Indian Military Veterans

Why disability pension tax upsets veterans

The notification created an uproar among veterans who called it against the interests of the armed forces personnel.


 The Opposition raised the matter in Lok Sabha on June 28, where Defence Minister Rajnath Singh said the government would look into these changes.The controversy over the Finance Ministry’s decision to tax the disability pension of armed forces personnel, which had been criticised by veterans, took a surprising turn on Tuesday when Finance Minister Nirmala Sitharaman made public an unsigned note that showed it was done on the recommendation of Army Headquarters. The Army note was put out on Twitter by her office, along with a message from her calling it the “response of the Armed Forces on the issue of taxability of disability pension”.
What govt notified
In a notification dated June 24, the Central Board of Direct Taxes (CBDT) under the Finance Ministry had said that “such tax exemption will be available only to armed forces personnel who have been invalidated from 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”.
This created an uproar among veterans who called it against the interests of the armed forces personnel. The Opposition raised the matter in Lok Sabha on June 28, where Defence Minister Rajnath Singh said the government would look into these changes.
It eventually led to the posting of the Army note by Sitharaman. The note says certain “unscrupulous personnel” have found leverage in the existing system for seeking financial gains through their disabilities. The Army, it says, is concerned about personnel who are boarded out because of disability and need additional financial support. It states that the broad-banding and higher compensation awarded for disability with tax exemption has over the years led to rise in personnel seeking disability, even for lifestyle diseases.
“There should be no segregation amongst genuinely disabled personnel. At the same time, those who have found the leverages in the existing system for seeking financial gains through their disabilities, need to be scrutinised and taken to task, wherever necessitated,” the note added.
Arguing that remuneration alone cannot compensate for the disabilities of those injured in battle, the note said the service must continue to provide them necessary support during service and after superannuation. “This aspect is being exploited by unscrupulous personnel, who have gained from disability benefits provided to disabled soldiers,” the note said. The note ends stating that the trend “if not checked at this stage, is a cause for worry”, as the Army cannot have large number of personnel with “medical disabilities in the rank and file, when the security challenge to the nation are on the rise”.
The other kind of disability
Disability benefits are of two kinds, both permissible under the rules: war injury pension attributable to operational service, and normal disability pension for any disability. The latter includes the so-called ‘lifestyle diseases’ which can be attributable to or aggravated by stress and strain of service, as entitled under the rules.
While the Army note dismisses the latter as not being favourable to the service, the effect of the stress of military service on a soldier’s health is a universally recognised phenomenon. Lawyer and expert in veteran affairs, Navdeep Singh, says that “disability rules in India and other democracies are balanced and work on the presumption of a military service-disability connection”.
His contention is based on peer-reviewed research in other democracies that have shown a direct linkage between military service and so-called lifestyle diseases. These include hypertension, cardiovascular problems and diabetes; these militaries seek to make the lives of their troops more comfortable — as seen in rising payouts for their loss of health. Research also shows a connection between military service and PTSD.
Singh, author of Maimed by the System and a member of the expert committee formed on veterans’ issues by Defence Minister Manohar Parrikar, wrote on Twitter that the Army’s note “not only berates persons with disabilities but is also contrary to rules on the subject, contemptuous to Court rulings, disrespectful of Commissions and Committees which have examined this and against the stated position of the government”. He argued that the government should not have taken cognisance of the note as “it unnecessarily creates doubts in the minds of well-meaning personalities”.
Other military veterans have a more emotional response, terming the Army note “unbelievable” and “utterly shocking”. They argue that if there is a misuse of certain provision, the Army is entitled to take suitable action to prevent that, including disciplinary action against those faking disability instead of punishing everyone

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Need compassion and not disdain, says 1971 war hero on Indian Army’s disability pension tax

, by indianmilitaryveterans

Indian Military Veterans

Need compassion and not disdain, says 1971 war hero on Indian Army’s disability pension tax

Maj. Gen. Ian Cardozo (Retd) has written to the Army Headquarters after the latter defended taxing the disability pension for personnel.

Snehesh Alex Philip Updated: 4 July, 2019 5:39 pm IST

New Delhi: Major General Ian Cardozo (retd), a 1971 war hero, has expressed “deep anguish” over the Army Headquarters using his name to defend the tax on disability pension, saying the matter needed to be dealt with “compassion and not disdain”.
After he stepped on a landmine during the Bangladesh war, Cardozo had to amputate his own leg with his khukri to keep gangrene from setting in. He was a Major at the time, in his early 30s, but continued to serve in the Army.
In a series of tweets earlier this week, the Army had referred to Cardozo’s case, also cited by veterans against the move to tax the pension, before going on to explain how genuine injuries of personnel were being exploited by personnel for monetary benefit. Some personnel were even claiming the pension for “lifestyle diseases”, the Army said, triggering a furious backlash from active and retired soldiers on social media.
In a letter to the Army Headquarters written Wednesday, Cardozo said the disabilities painted as “lifestyle diseases” in the tweets “are fully covered under the rules for disability pension”.
He said “lifestyle diseases” are covered under the pension for defence services and central armed police forces since they are caused by service conditions such as frequent movement, exposure to operations, inability to cater to domestic requirements, lack of sleep etc.
The only “lifestyle” that a soldier knows is “military lifestyle”, he added, saying “we cannot wash our hands of soldiers who incur disabilities during the course of their service”.
“What our soldiers suffering from any disability require is care and compassion, not disdain,” Cardozo said.
“Though the tweets referred to my war injury and my commitment to the organisation despite my disability, the same was apparently used to show other disabled personnel, that is, those who are suffering from non-combat disabilities, medical conditions and ailments, in an unpleasant light,” he wrote.
“The tweet also displayed lack of proper understanding of the issue which has legal, regulatory, medical, practical and tri-service dimensions,” he added.
“The misuse of ‘broad-banding’ alleged in your tweet is also puzzling,” said Cardozo. “Broad-banding is nothing but payment to disability pensioners in three broad bands of 50/75/100% introduced by the Fifth Pay Commission w.e.f 1996 to offset medical subjectivity due to varied percentages awarded by different boards and has been mandated by the decisions of the Hon’ble Supreme Court,” he added.


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Demonising Soldiers Over Disability Tax Lowers Morale of Entire Army Th

, by indianmilitaryveterans

Indian Military Veterans

Demonising Soldiers Over Disability Tax Lowers Morale of Entire Army

Those unfairly exploiting the system should be given exemplary punishments, but demonising of soldiers and threatening withdrawal of facilities is not good for the morale of the army.

Lt Gen (Retd) DS Hooda | 

Updated:July 4, 2019, 9:01 PM IST

On June 24 ,the Central Board of Direct Taxes (CBDT) issued a circular withdrawing the benefit of income tax exemption on the disability pension to military veterans who had retired after serving their full term.
The veteran community rose up in protest against one more instance of bureaucratic apathy towards the armed forces and the typical insensitivity in dealing with disability cases. Facing criticism, the defence minister promised in Parliament that he would look into the matter.
The dust kicked up by the finance ministry circular would probably have died down in a few days after the usual Twitter war and television debates. The outcome would either have been a retraction of the order, as has happened in a few cases in the past, or a weary acceptance by the disabled veterans to start paying the income tax.
However, the events that followed a few days later reignited the debate. These events are, in my opinion, much more worrying when viewed within the broader context of our civil-military relations. On July 2, the Finance Minister tweeted an undated and unsigned letter calling it the "response of the armed forces on the issue of taxability of disability pension”. It is evident that this response came after the CBDT circular had already been issued because it quoted the case of Major General Ian Cardozo who had appeared on some television channels and criticised the government’s move.
Even considering that the finance minister’s decision was based on prior recommendations of the army, the alacrity with which the decision was taken is remarkable. Contrast this with the anomalies of the 7th Pay Commission remaining unresolved, the Justice Reddy report on One Rank, One Pension seemingly buried, and the recommendations of the military on Non-Functional Upgrade not being accepted. The last case is being fiercely contested by the government in the Supreme Court.
There is also a more significant issue of the political leadership placing the military in front while taking policy decisions. Having taken a consistent stance in the past that no one should question the military, there is now an attempt by the government to put the onus for this poor decision on the army. However, in a democracy, policy-making should remain firmly in the hands of the civilian government and hiding behind the military has many adverse implications on the future of our civil-military relations.
It is also worrying that the army has willingly lent its shoulder to a decision that goes against its own soldiers. The language in the letter tweeted by the finance minister was in extremely poor taste, but the speed and manner in which the official Twitter handle of the Indian Army reacted was even more shocking.
In retweeting the letter, it sought to justify the decision based on the exploitation of disability benefits by "unscrupulous personnel" and a rise in "personnel seeking disability, even for lifestyle diseases”.
There are many logical and legal infirmities with the justifications given in the letter, but my intention is not to go into these. What is of greater concern is a growing trend in the army to make public comments that paint its own officers and men in poor light. We regularly read about the misuse of hotel stay, canteen facilities, ex-servicemen health benefits, and now disability pension. If there are infirmities in our procedures, they must be ruthlessly plugged and those unfairly exploiting the system should be given exemplary punishments. However, this demonising of the officers and soldiers and threatening withdrawal of facilities is not good for the morale of the army.
There is an accepted 'Military Covenant' between the nation and its soldiers. Some countries like the United Kingdom have formally introduced this term in public life, while others look upon it as an unspoken pact, but the meaning of the covenant is clear. Soldiers put the nation above themselves and willingly sacrifice their limbs and lives in the line of duty.
In return, the state has the moral obligation to value, respect, and support the soldiers and their families with commensurate conditions of service. This is a mutual obligation that forms the basis of the relationship between a country and the members of the armed forces, and any weakening of this bond due to suspicion and mistrust does not bode well.
Many respected veterans have expressed the confidence that the decision on taxing the disability pension will be reversed with the intervention of the defence minister. Mr. Rajnath Singh is an ardent supporter of the soldier, and his first visit after taking charge was to the Siachen Glacier. Among those waiting anxiously for his decision will be the soldier who lost his foot to a mine blast while returning after successfully carrying out the 'surgical strike’ of September 2016.
(The author is former Northern Commander, Indian Army, under whose leadership India carried out surgical strikes against Pakistan in 2016. Views are personal.)

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