In a move that could stoke controversy, the Finance Ministry has said that the disability pension will be tax-free for only those personnel who had to leave service due to disability suffered while on duty.
In a circular issued, the Finance Ministry said that disability pension will be “available only to armed forces personnel who have been invalidated from service on account of bodily disability attributable to or aggravated by such service and not to personnel who have been retired on superannuation or otherwise”.
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The new changes are applicable to personnel of all ranks from Army, Air force and Navy.
This means that pension will not be tax-free for defence personnel who retired from their services or attained superannuation.
Armed forces personnel who suffer any kind of disability due to their service receive separate disability pension. The amount depends on their rank and the kind of disability which has been classified into three types of disability pensions — war injury, normal disability (attributable to the military service) and the one aggravated by the military service.
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Earlier, the defence ministry had decided that disability or war injury pension for armed forces personnel shall be minimum Rs 18,000 per month.
The move has however not gone down well with a large section of the ex-servicemen who see this as yet another new way to cut down benefits of the armed forces.