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Puncturing Disability

July 6, 2019 By Lt. General P.C. Katoch (Retd)
The Author is Former Director General of Information Systems and A Special Forces Veteran, Indian Army


Armed forces personnel who retire after full service with some disability will not get income tax exemption

There is considerable debate over a Central Board of Direct Taxes (CBDT) circular dated June 24, 2019 saying that tax exemption for 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". Media has also quoted an IT official in saying, "Those who retire after full service with some disability will not get income tax exemption". This is a departure from what was being followed. In December 2014, Lt General B.K. Chopra, then DG Armed Forces Medical Service (AFMS) wrote a letter (DO Letter No. 04133/1/DGAFMS/DO/2014 dated 16 December 2014) to the Defence Secretary that senior officers of Lt Gen and Major General equivalent who stayed in service as SHAPE-1, suddenly present medical problems before superannuation to claim disability pension, and specialists and medical officers under their command are constrained to oblige. He also mentioned that some senior officers were making such claims 'post' retirement. Summarising the issue, he wrote that "Disability Pensions have become easy and attractive source of tax-free supplementary income rather than the lifeline to wounded veterans that was nobly intended by the lawmakers", and adding that this "needs to be curbed to prevent the inevitable epidemic of such cases in the future. I look forward to hearing your views and suggestions in this matter". Chopra took over as DG AFMS on 31 October 2014. Both the Kargil Review Committee and follow up Group of Ministers had recommended placement of DGAFMS and DGQA under HQ IDS, but the bureaucracy stonewalled it placing personal interests over improvements needed, which is their norm always. Chopra became DG AFMS after fighting a court case and apparently was in a hurry to ingratiate himself to the bureaucrats. The "alarming" trend he mentioned could not have occurred overnight and was he not party to what he mentions while serving in the military, in exchange for gratification in whatever manner including good chits and promotions? What stopped him to put his foot down when confronted with such situation in the military. Being the topmost medical authority isn't it ridiculous he asked the defence secretary for views and suggestions in this matter". Why could he not recommend measures like: disability medical boards be held in sister service, not within own service, and; disability boards in last four years of service be only permitted under tri-service arrangements? Chopra could have specifically cited two-three cases and recommended inquiries, which would have set example for those indulging in misuse (shoot the messenger), but didn't for protecting himself and those wearing the same lanyard.

In reply to an RTI in 2017, it was revealed that MoD had spent Rs 47 crore in fighting cases against pension of widows and disabled. MoD has been hiring a battery of lawyers, paying them Rs two lakhs each from the defence budget despite having won a single case to-date. Not only is the issue of fighting against pension of disabled and widows unethical, it indicates the sadistic pleasure by the Department of Ex-Servicemen Welfare (DESW) and the MoF. The aforesaid CBTD circular is in the same vein, timed with change of government. Chopra's 2014 letter to defence secretary has also suddenly re-appeared as hot news in media. Recall, Nirmala Sitharaman telling Parliament that MoD will not withdraw court cases against widows and disabled, but closer to elections, media reported government will withdraw such litigation on "case to case" basis; red herring because the propaganda otherwise would have been deafening citing cases where government indeed had done so.

Legally, any person who "Retires with Disability," which is attributable to or aggravated by Service conditions, will be "Presumed to be Invalidated out from Service," for Pension benefits. But there is difference in disability pension of persons invalidated out and superannuated / premature retirement (PMR); 50 per cent disability pension for persons who are invalidated out but in PMR / Superannuation cases, disability must be 20 per cent or more to earn disability pension. The above CBDT circular, says that income tax exemption would be available to all armed forces personnel (irrespective of rank) who have been invalided out of such service on account of bodily disability attributable or aggravated by such service, not to personnel who have been retired on superannuation or otherwise despite being disabled. This is in sharp contrast to law that caters for compensation to disabled soldiers attributable or aggravated while in service. Creation of new classes within the disabled for purposes of income tax exemption has ramifications that need to be understood in the right perspective.

There are several instances of soldiers suffering disability in service and yet continuing in service, most prominent ones being Lieutenant Generals Pankaj Joshi, Vijay Oberoi and Ian Cardozo who lost limbs in action but chose to serve on instead of taking the soft route of getting invalidated out. There are similar examples down to the soldier level. Are we all of a sudden going to deny income tax exemption to these brave soldiers all these years? Replying to a question in Lok Sabha, Defence Minister Rajnath Singh has said that he would look into the Finance Ministry's ruling that disability pension will now be taxable unless they were forced or "invalidated" out of service because of the disability sustained in service.

Concurrently, a post in circulation on social media quotes FM Nirmala Sitharaman in saying that withdrawal of income tax exemption where persons with disability continued serving till superannuation is on recommendations of the military, and not initiated by her Ministry. But why is the military hierarchy ingratiating itself to the bureaucracy à la B.K. Chopra. If this category of disabled were getting income-tax exemption all these years, what is problem of the military hierarchy?

Are they even aware that civilians in receipt of disability pension are also granted income-tax exemption and unlike Armed Forces, they are granted income-tax exemption even if the disability is less than 20 per cent. This perhaps is the first time that the military hierarchy has gone on record against gallant heroes who gave their blood and limbs in service of the nation! How they can live in such ignominy is another wonder. Additionally, stringent action must be taken to deny 'pseudo' disability. Doctors giving false certification are equally at fault, but measures must be instituted to ensure they are not pressurised.