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Defence Minister Rajnath Singh. Photo: Mint
Defence Minister Rajnath Singh. Photo: Mint

Defence ministry withdraws order on income tax deduction from disability pension

Ministry directs accounts department to withdraw circular asking banks to deduct income tax from disability pension

NEW DELHI : The Ministry of Defence has directed the defence accounts department to withdraw a circular directing banks to deduct income tax from those pensioners affected by disability.

The matter had been a sore point with the retired pensioners as well as others in the armed forces and represents a roll back of a decision taken last year.

Last year, the defence ministry had said that income tax exemption on disability pension would be available only for those military personnel who have been ‘invalidated’ from service due to disability. It was pointed out that the benefit would not be available for those with disabilities who retire after completion of their service.

The move led to an outcry in the defence fraternity with Defence Minister Rajnath Singh promising to look into the matter.

The three services chiefs had later recommended that disability pension for military personnel should be exempt from income tax only upto a certain limit and taxed beyond that.

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