The disability pension given to military personnel will now be taxable, unless they are forced out of service due to disability sustained in service, according to the Union Finance Ministry.
The notification, issued by the Central Board of Direct Taxes, clarified that "income tax exemption" for disability pension will continue to be available for all Army, Navy and IAF personnel, "who have been invalidated from service on account of bodily disability attributable to or aggravated by such service."
It added that such exemption would not be available for "personnel who have been retired on superannuation or otherwise."
Armed forces personnel who suffer any kind of disability due to their service receive a separate disability pension, the amount of which depends on their rank and the kind of disability.
Friction between armed forces and government
The move has created friction between the armed forces and the personnel. In response to the notification, the servicemen said that it is yet another way to cut down benefits of the armed forces.
"This is absolutely absurd. The disability took place while serving the nation. No one likes to see himself disabled, and this tax is levied on disability pension is like rubbing salt into the wound," The Print quoted a serving personnel as saying.
As per the current scheme, there are two types of disability pensions - war and normal, according to a 1922 notification. War disability is 60 per cent of the last salary drawn in case of 100 per cent disability and normal disability is 30 per cent of the last salary drawn in case of 100 per cent disability.
The pension goes down proportionally for the lower percentage of disability.