Ex-servicemen receiving disability pensions will be exempt from income tax in 2024

Indian Military Veterans

Ex-servicemen receiving disability pensions will be exempt from income tax in 2024

Yes, your pension is completely exempt from income tax. To put it more simply, if you receive a disability pension and another pension from the Ministry of Defense, the total amount of your pensions, i.e. the full amount of your H. pension, will be exempt from income tax. Let's get to the whole issue with the relevant rules and authorities.

The rules of income tax should be known by all earning members of the family. In this article, we will explain in detail the rules of exemption of pensions from tax in certain cases. Each employee must take great care to pay income tax according to his/her tax liability. However, all pensioners are also liable to pay tax. In this article, you will learn that special categories of ex-servicemen are exempt from paying tax on pension income. You may have heard that the pensions of military pensioners who receive disability pensions are tax-free, but you should know the applicable rules.

Types of disability pension

Disability pension awarded to Armed Forces Personnel (all ranks) comprises two components viz

•      Disability element
•      Service element.

Govt authority letters and OM on Exemption of Income Tax for Disability Pensioners

According to the Govt orders, both the components of pension are exempted from paying income tax.  Following Govt Orders are treated as authority.

• Ministry of Finance,  CBTD Cirular No No. 200/51/00-ITA-1 dt. 02.7.2001.
• Govt of India, Ministry of Finance Press Release dated 20122007.
• Ministry of Defence, PCDA Circular No. 210 Dated 20.02.2020.
• Ministry of Defence, PCDA Circular No. 211 Dated 03.03.2020.

Copy of CBTD Cirular No No. 200/51/00-ITA-1 dt. 02.7.2001

Ministry of Finance Deptt. Of Revenue

Central Board of Direct Taxes, New Delhi.]

No. 200/51/00-ITA-1                                                                                      dt. 02.7.2001

Subject:   Exemption from income tax to disability pension, i.e. ”disability element” and “service element” of  disabled officer of the Indian Armed Forces- Instructions regarding.

Reference have been received in the Board regarding exemption from income tax to disability pension, i.e. “disability element” and “service element” of a disabled officer of the Indian Armed Forces.

2. It appears that field formations in certain cases are not uniformly allowing disability, pension in spite of Board’s Instruction No.136 dated 14th January, 1970 (F.No.34/3/68-IT(A.1)).

3. The matter has been re-examined in the Board and it has been decided to reiterate that the entire disability pension, i.e. ” disability element” and “service element” of a disabled officer of the Indian Armed Forces continues to be exempt from income tax.

4. This may be bought to the notice of all the officers working under you.

                                                                                     Sd/- 
                                                                                B.L. Sahu  
  Officer on Special Duty (ITA .1)

It has been reported in the press that some banks were deducting tax from pension of disabled exservicemen in violation of Government instructions. RBI was requested to have the matter investigated and remedial action taken. After examination, RBI discovered that in one specific instance, due to oversight, the pensioner’s disability pension was wrongly taken into account while calculating income-tax.

RBI has issued instructions to all agency banks to strictly adhere to the provisions of para 88.3 of Defence Pension Payment Instructions, 2005, regarding exemption of income-tax of the disability pension of the pensioners of Armed Forces. Banks have been advised to issue suitable instructions to all their pension disbursing branches that income-tax should not be deducted from the disability pension paid to the pensioners of the Armed Forces.

Click here to read/ download the Ministry of Defence, PCDA Circular No. 210 Dated 20.02.2020.

Click here to read/ download the Ministry of Defence, PCDA Circular No. 211 Dated 03.03.2020.

Know about Supreme court order on disability pension for NA NA Case.

Details of Supreme Court Order 2013 on Disability Pension for NA NA Case  and its impact     

It is a well known truth that all Armed Forces JCOs/OR & Officers discharged from service on Low Medical Category due to medical invalidation or superannuation after completion of their terms of engagement under Rule 13 (3) of the Army Rules, 1954 are not granted Disability Pension. At the time of discharge from service of such personnel, the Release Medical Board (RMB) is conducted at the concerned Service Hospital for assessment of disability.

In some cases the medical board opined the disability to be neither attributable to nor aggravated (NANA) by service. In such case, the veteran is not granted any disability pension.  Such retired Armed Forces Personnel/Officers are given opportunity to Appeal the pension disbursing authority facilitate as First Appeal and Second Appeal respectively.