NEW DELHI : The Defense Ministry ordered the Defense Accounts Department to withdraw a circular ordering banks to deduct income tax from retirees affected by disabilities.
The case had been a sensitive point with retirees as well as other members of the armed forces and represents a step back from a decision taken last year.
Last year, the Defense Ministry said the disability pension income tax exemption would only be available to servicemen who have been “disabled” from service due to a disability. . It was pointed out that the benefit would not be available for people with disabilities who retire after completing their service.
The move sparked an uproar in the defense fraternity, with Defense Minister Rajnath Singh vowing to look into the matter.
The three department heads subsequently recommended that the disability pension for military personnel be exempt from income tax only up to a certain limit and taxed beyond.
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