Two soldiers injured in the same operation must not be treated differently for taxation merely because one continued to serve longer.

The Finance Bill, 2026 has proposed to terminate income-tax benefits accruing from disability pension to those soldiers who have served and superannuated with disabilities.

According to the proposal, I-T exemption for disability pension will only be provided to a soldier who is invalided out of service on account of bodily disability attributable to or aggravated by service.

The tax exemption for disability pension which was provided for in the Income-Tax Act, 1922, was continued in the Income-Tax Act, 1961.

In June 2019, a circular issued by the Central Board of Direct Taxes (CBDT) dropped a Finance Bill-like bombshell, but the Supreme Court stayed it on the grounds that a mere administrative circular cannot override established pension rules. Now, by amending the Income Tax Act itself, the government has had its way.

This is in effect a declaration of abandonment by the government that such soldiers who sacrificed their well-being in the line of duty are no longer worthy of support.

The rigours of military service are because the soldier follows orders and faces danger and extreme conditions of service subject to various difficult facets and areas where personnel are deployed in defence of the country. The very fact that the law caters to disability is proof of the recognition of the need to compensate a serviceman or woman for the bodily disability attributable or aggravated by her or his service.

A disabled veteran lives with a lifetime of limitations due to his medical condition. There are two clear outcomes of a disability: First, the disability that causes a soldier to be invalided out of service as the disability was so severe that he/she could no longer serve in the forces.

Second is the disability that is caused due to service but the individual is yet capable of serving (albeit under restrictions due to medical reasons) in what is called a ‘medical category’ in military parlance.

It is the second category that is being now taxed for their disability pension after they superannuate. The armed forces look after their own, especially their heroes who are incapacitated due to operations and even in peace-time service.

The case of a vehicle mechanic who lost his limb due to a vehicle toppling on him when he was repairing it is no less attributable than that of a soldier who gets shot by the enemy or terrorist and is termed a ‘Battle Casualty’. These individuals are considered on case-to-case basis and permitted to serve their full tenure.

It is a matter of pride that some such heroes have risen to top ranks and are held in deep regard by the military fraternity. The new condition seemingly denies the exemption from tax to the disability pension of these soldiers. The case of Maj Gen Ian Cardozo, who self-amputated his leg during the 1971 war, is a sterling example of raw courage.

However, his (or similar) sacrifice will now be taxable. How prudent is this recovery of tax from the disability pension of a person who never thought about severing his own limb for the security of the country? His words, “There is not apathy in bureaucratic circles but antipathy”, reverberate profoundly in military circles and will resonate with many a self-respecting patriotic Indian.

Disability pension is a compensation for permanent impairment attributable to military service. By linking its taxability to the mode of retirement violates the principle of equality.

Two soldiers injured in the same operation must not be treated differently for taxation merely because one continued to serve longer. Penalising perseverance by a disabled soldier by taxing his disability pension is both petty for a government and damaging for morale of those serving.

Cases of tax evasion in other spheres of economic and financial activities need to keep the tax lawmakers occupied. To say that it has been done to plug loopholes being exploited in the taxation of disability pension due to cases of misrepresentation and misuse by the military hierarchy is an administrative failure of the system.

Such cases must be dealt with departmentally and accountability of the defaulters must be fixed. This institutional failure must not be shifted onto those who have served the nation and paid a very high price. Veterans are not opposing reform, but they do not deserve retribution by way of law.

The average citizen needs to be aware of the ever-increasing animosity being generated by seemingly innocuous steps being initiated by the Ministry of Defence (MoD).

Many instances exist, some glaring but others innocuous in their introduction yet damaging the standing of the Armed forces. The case of the orders of opening of cantonment roads some years ago by a missive from the MoD created a messy debate.

Accusations of political favours and selective decision making aggravated the fissures in a strained civil bureaucracy-military relationship. The present follow-up action to ensure that the stayed 2019 CBDT circular gets legally implemented seems to be yet another instance in the same vein as with numerous other pinpricks such as One Rank One Pay anomalies and ration money disallowment (and its subsequent reinstatement).

The government should look at the larger picture. Efforts to accelerate procurement of arms and ammunition must be in sync with measures that are not detrimental to morale, training and risk-taking by soldiers.

On their part, the armed forces have to clearly differentiate those cases of disability attributable to and aggravated by military service and unambiguously lay down the criteria for grant of disability pension. Any misuse must be addressed through stricter scrutiny. Once the disability is granted, it must be honoured by bureaucrats and ministries alike as a service to the nation which must not be taxed.