income tax on pension

Pension of MP & MLA Exempted from Paying Income Tax but Soldiers and Veterans not: Grievances of Pensioners

Pension is an award of past service and can not be termed as income for any work or profit of business.  So, income tax is not legitimate “ Says the pensioners of Govt of India and State Govt Pensioners Associations.  “Defence Pensioners also added that the pension of the soldiers are not exempted from paying tax but the MPs and MLAs are enjoying tax free pension for life.” – the Veterans of Indian Armed Forces expressed in the Social Media Platform.

Disability pension of the soldiers who have invalided out of service is fully exempted since long as per the provision of  Section 10 of Income Tax Act 1961.  In the year 2019, the CBDT issued an order iwith an instruction that the disabled soldiers who have any bodily injury only may get exemption on their pension for paying income tax.  But the order has been challenged in the Appex Court and Hon’ble supreme Court has issued stay order against the impugned order of the MoF.  You may refer the article below to know detailed info on the issue –

Income Tax Exemption Rules for Defence Pensioners : Changes after GMO and ER 2023

Association of  Pensioners  namely  Bharatiya Pensioners Manch has urged Prime Minister Narendra Modi to exempt pension from income tax to provide relief to the senior citizens in the country. In a representation submitted to the prime minister on August 25 last year, the body argued that if the pensions of the Members of Parliament (MP) and Members of Legislative Assemblies (MLA) are not taxable, then why does the government levy income tax on the pension of retired employees. “Every retired person is paid pension as a superannuation fund for his/her livelihood on account of serving the nation for so many years.

The vital question has been raised why the income tax is levied on pension (of retired employees). This is not an income for any service or work. If MPs and MLAs pension is not taxable, why our pension is taxed?” the Association stated in their representation. The body in its first all-India conference held at Shirdi (Maharashtra) on July 23, 2018 has resolved that pension should be exempted from income tax.  Since then, this issue is continuously being raised by this organisation with the finance minister, but there is no response from the ministry, it stated. In the letter to the PM, the body also pleaded that , “Bharatiya Pensioners Manch urges upon you to kindly intervene into the matter and direct the Ministry of Finance to consider this long pending genuine demand of pensioners. 

The Armed Forces Pensioners and family pensioners who sacrificed their life for the nation with a high risk also not exempted from paying income tax whereas the  MLAs and MPs are enjoying life time tax free pension.

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An early and immediate action with a line of reply to this organisation will be highly appreciated.” The Association also stated that it wrote to the Minister of Finance on the issue on August 23, 2018, on December 14, 2018 and on February 25, 2021 in several occasions. Referring to their earlier letters written to the Minister of Finance, the body said, “We are sorry to say that nothing has been done so far in this regard.”

 The united associations of the Pensioners also referred to an order of the apex court where the Supreme Court had held that pension is valuable right vested in a government servant and that the right to receive pension is a property under Article 31 of the Constitution. If it is denied to an employee, a writ of mandamus could be issued to the state to properly consider the claim of the pensioner for payment of pension according to law, it added referring to the SC ruling. 

Govt of India and the State Government concerned have still not responded on the issues related to exemption of the Income Tax on Pension of the senior Citizens and retired soldiers.

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