The three services are putting together recommendations on the issue of taxing disability pension to be submitted to the Defence Ministry very soon.The Army is mulling over several options to streamline the existing system for grant of disability pension and the manner of calculation, defence sources said. The Army has written to the other two Services and put forward some suggestions which were discussed by the Chiefs of Staff Committee comprising the three Chiefs on July 31.“The Army has put forward several points for discussion. These include disability pension to be calculated on the pension element and not on the last pay drawn which will reduce the disability pension by 50% and percentage of disability to be increased from 20% to 30% to be eligible for disability pension,” a defence source told The Hindu on condition of anonymity.Further the Army has suggested that no income tax benefit be given on service pension to disability pensioners and also that there should be no rounding off or broad banding of the disability element. However, it has been learnt that the Navy and Air Force Chiefs were not in full agreement with the Army.Last week, Army Chief Gen. Bipin Rawat said that Services were looking into the whole issue and will give their recommendations to the Defence Ministry very soon on how it should go. In a notification dated June 24, the Central Board of Direct Taxes said “such tax exemption 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 retired on superannuation or otherwise.”
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