Order halting I-T relief to disabled soldiers back

Ajay Banerjee

Tribune News Service

New Delhi, February 21

In a surprise move, a wing under the Ministry of Defence (MoD) has put out an old circular withdrawing income tax benefits to disabled soldiers.

The fresh circular, by the Principal Controller Defence Accounts (PCDA) dated February 20, cites the June 24, 2019, order on withdrawal of income tax exemptions. The same has been sent to all banks and state treasuries, meaning banks through which pension is transferred to individuals can now deduct income tax of disabled soldiers. The new circular comes despite the fact that the Supreme Court has granted a stay on the matter, saying “parties (the MoD and respondents) shall maintain status quo on the matter”.

The issue may come up for listing in the apex court sometime later this year.

On July 8, Defence Minister Rajnath Singh had on the floor the Rajya Sabha promised “no soldier with a disability will be inconvenienced” after Finance Minister Nirmala Sitharaman tweeted a note from the Army to justify taxing of disability pensions.

“A clarification has been sought from the Central Board of Direct Taxes and the issue is being re-examined by the ministry,” Singh said answering a question raised in the Upper House. The SC later granted 'ex parte stay'.

Taxing disability pensions has become a political issue and has been raised twice in Parliament. The Central Board of Direct Taxes (CBDT) had on June 24 issued a circular, saying disability pension would be taxed if the soldier had served his full term with the armed forces.