Tax on disability pension

 Tax on disability pension

The government has withdrawn a circular of February 20 that had directed banks to deduct income tax on pension and disability benefits provided to disabled retired military personnel.

Previously 

 Although the letter provided exemption to those invalidated from service due to bodily disabilities, the sudden deduction of tax liabilities by the banks led to a public outrage, forcing the government to keep the decision in abeyance.

Also

Ø The entire pension and disability element of pension in all the categories is exempt from payment of income tax.

Ø But the Central Board of Direct Taxes{CBDDT} had said that tax exemption on disabilities pension would be available only to personnel who had been invalidated from service and not to personnel who had retired otherwise.