Income Tax exemption on complete pension of disability pensioners
The entire pension, that is, service element (service pension) and disability element of disability pensioners is exempted from the purview of Income Tax. Disability Pension comprises of two elements, service element that is granted in terms of the length of service (subject to a minimum amount in cases where service rendered is less than pensionable service), and disability element which is granted in terms of the percentage of disability. There is no minimum qualifying service prescribed for service element or disability element, hence even if a person has a single day of service, he or she is entitled to disability pension. For individuals who have completed their minimum qualifying service for pension, their service pension becomes the service element for purposes of disability pension. Both elements are exempted
The Ministry of Finance, Department of Revenue vide Instruction No 2/2001 dated 02 July 2001 and Instruction No 136 dated 14 January 1970, both of which can be viewed and downloaded by clicking here.
Sir, whether the service element pension of veterans not disabled , but retired on superannuation and retired on completion of initial engagement period of 15 years can also fall under exemption category in view of broadbanding of diability concept now.
ReplyDeleteIt is good to know that the complete pension of disabled pensioners of Indian Military gets exemption from income tax. In my opinion all pension (Indian military veterans and all others as well) should be exempt from income tax. After working and paying tax for so many years atleast one should not be expected to pay tax on retirement. Govt should try to give more benefits especially for senior citizens.
ReplyDeletei am a disability pensioner after puting 18 years service in the indian army now i am serving in the central government employee. our department is deducting income tax on my pension which is exempted. after submitting the exemption order of IT department. please advise me how i can stop the practice of our department/
ReplyDeleteI find that large number of web sites are carrying information that disability pension (service and disability element)received by the memebers of Indian Armed Forces is exempt from income tax and are referring to the Instructions issued by the Central Board of Direct Taxes (dated 14/01/1970 and 02/07/2001.
ReplyDeleteIt is clarified that these instructions given by the Central Board of Direct Taxes are with reference to the exemption granted to the disability pension received by specified persons under Entry 29 of Notification No. 878-F (Income Tax) dated 21/03/1922, issued under Section 60 (1) of the Income Tax Act, 1922. Income Tax Act, 1922 was rescinded on 31/03/1962 but a saving clause was provided under Section 297 of Income Tax, Act 1961 under which the aforesaid exemption was saved.
However, a reading of this entry shows that this exemption is available only to the members of His Majesty's Naval, Military or Air Forces and other specified Forces. The exemption is available to the Indian or British citizens who were invalided on account of physical disability. This exemption was not applicable to memebers who are given pension for disability assessed at the time of their retirement.
There is no provision under the Income Tax Act, 1962 which grants exemption to disability pension received by Members of Indian Armed Forces. However, they can avail of deduction of Rs. 50000 or 100000 as the case may be under Section 80U if their disability is above specified percentage. Thus, a disabled member having disability of 50% has no tax liability if his total income includig disability pension is less than 3 lakh.
Officers not discharging their income tax liability on disability pension or retiring pension and disability element are advised to consult a tax expert to avoid unpleasant consequences for non-compliance with tax laws.
Is this exemption available to a Jawan who is not an officer.
ReplyDeleteYou actually make it seem so easy with your presentation but I find this matter to be actually something which I think I would never understand.
ReplyDeleteIt seems too complicated and very broad for me. I'm looking forward for your next post,
I will try to get the hang of it!
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