Income Tax Exemption for Exservicemen getting Disability Pension in 2023

Yes, your pension is ful;ly exempted from paying Income Tax. In more simple words, if you are gettuing disability pension and other pension from Defence authority, your total pension amount i.e all pension amount is exmpted from Income Tax. Lets know the entire matter with proper rules and authority.

Income Tax rules should known to all earning members of a family. In this article we will learn about the rules related to Exemption of tax on pension in certain case. Individual salaried person are colsely watched to pay Income Tax as per their tax liability. However, all pensioners also liable to pay Tax. In this article you will come to know that the Exservicemen of special category are extempted to pay any kind of Tax out of his pension income. You may hear about the Pension of Armed Forces Pensioners who are getting Disability Pension is exempted from paying Tax but must know the Rules of the claim.

SPARSH Pensioners Submit Life Certficate Immediately Either Pension may be stopped

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.

Detailed process of efiling Income Tax so that you can get your entire pension Tax exempted (both disability and service element) is available in our Youtube Channel. Click here to watch the video.

Know your Disability Pension with Entitlement Rules and Eligibility

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)

Press Release, dated 20-12-2007

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.

Authority Letter by Defence HQ on Toll Tax Payment Exemptions for Military Personnel

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. Read more.

For Family Members of Exserviceman – Dependent I card Application Porcedure
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