Military veterans have slammed the Centre’s decision in the budget to discontinue income tax exemption to defence personnel receiving disability pension after having retired on completion of their service.
According to the budget, only those armed forces personnel who were “invalidated” out of service midway on account of bodily disability will be entitled to the exemption from now on. Personnel who retired after completing their full tenure (superannuation) with a disability will no longer qualify for this tax exemption.
Veterans said the latest move would have ramifications on disabled pensioners, considering that the number of superannuated personnel was much higher than those invalidated out of service. Till now, there was IT exemption on the entire disability pension received by defence personnel.
Former major general Shail Jha said the decision would “destroy the ethos of commitment of the professional soldiers”.
“The nation’s security was first eroded by the Agniveer scheme and now with the attack on disability pension it is destroying the ethos of commitment of the professional soldiers to any security threat natural or man-made. The last nail on the coffin of a nation’s defence is being struck,” he said in a post on X.
Echoing him, retired major general Birender Dhanoa wrote on X: “In the finance bill 2026, the Government, in a fit of extreme benevolence towards war wounded and disabled veterans/ service personnel, removed all income tax exemption benefits on war injury and disability pensions when such brave hearts continue to serve till superannuation. Wow!
“In the services today, if you are wounded in the line of duty and invalided out, no indexation of pension but your income is exempt from tax. If you continue to serve till retirement, you get pension indexation but no income tax benefits. Either way the house (I mean Govt) wins.”
The government, he said, has removed tax exemption, in place since 1922, for military personnel who were wounded and disabled in the line of duty in spite of their continued service till retirement. “So where’s the dignity of these persons with disabilities? Invisible?”
Questioning the rationale behind the decision, a former colonel asked how could there be two classes of disabled pensioner soldiers while extending income tax exemption. “It is shocking that the government is now again discriminating against soldiers who suffer disability while serving the country,” he said.
The government, he said, has already ensured that there are two types of “soldiers” — those who receive pension and those who do not — by introducing the new military recruitment scheme Agniveer.
“The government has yet again created a divide between jawans,” he said.
In many cases due to manpower crunch, soldiers who become disabled during service are retained in service through sheltered appointments for administrative work. Essentially, when a serving army officer is injured and disabled on duty, they are eligible for a disability pension, treatment for life and an additional tax-free disability pension.
However, under the Agnipath scheme, soldiers are being recruited on a short-term contractual basis and get a one-time payout depending on his disability, varying from ₹44 lakh for 100 per cent disability to ₹15 lakh for 50 per cent or lesser disability.