The directive comes after a circular against the tax exemption of invalidity pensions for veterans
The Defense Ministry on Tuesday ordered the Chief Defense Controller (PCDA) to stop deducting tax on veterans’ disability pensions and to withdraw the disputed circular issued to that effect.
“In view of the instructions of the Supreme Court, PCDA (P), Allahabad may be advised to issue a circular to the pension payment agencies not to proceed with the collection of income tax on the pension of invalidity in accordance with CBDT Circular No. 210… dated February 20, 2020, until a final decision is taken by the Supreme Court in the matter, ”the ministry said in an order. The order was issued with the approval of the Secretary (Defense Finance).
The PCDA, Allahabad had issued a circular, dated February 20, for “necessary action” on a June notification from the Central Commission on Direct Taxes (CBDT) that the disability pension tax exemption would not be available. only for personnel of the armed forces who had been disabled. service and not to personnel who had been retired on superannuation or otherwise.
Acting on the PCDA circular, the State Bank of India at the end of last week levied a withholding tax for the full year on the February pension of veterans receiving a disability pension. . their accounts.
However, the Supreme Court, which is hearing the case, had, in its order of August 30, 2019, ordered all parties to maintain the “status quo” in the matter. “The PCDA order is in contempt of court because there is a stay on the matter,” said a defense official, who requested anonymity.
IT did not oppose the exemption
Even the income tax department, in its affidavit submitted to the Supreme Court in December 2019, had not opposed the disability pension tax exemption for veterans, officials said. defense.
“Rather, the affidavit supported disabled pensioners and stated that the intention was not to withdraw any tax exemption for disabled pensioners but only to clarify that such an exemption is not available to retiring and developing staff. subsequently a disability, ”said another defense official, who declined to be identified, said.
In its submission to the xourt apex, the IT department also stated that it “fully understands that the health of military personnel is affected by hostile conditions and separation from family and that they have adopted no instruction for the deduction of income tax, “said the official. added.