india

Updated: May 30, 2019 07:44 IST

A May 24 order from the army to the effect that all serving and retired service personnel cannot buy a car priced in excess of ₹12 lakh, nor one with an engine capacity over 2500 cc, from the army canteen, has elicited a flurry of angry response from veterans.

A prominent veterans’ group has asked for immediate reversal of this order.

Cars sold through the Canteen Sales Department, run by the army, like other products sold through the canteen, cost less because there is no tax on them. In the case of cars, the tax component (GST) is 28%.

Indian Ex-Servicemen Movement chairman Major General Satbir Singh (retd) criticised the restrictions, saying it could affect the morale and motivation of soldiers. “That will also hit efficiency,” he said.

In addition to the restrictions on price and engine capacity, the new norms also say a serving or retired jawan can buy a car from the canteen only once during service, and once after retirement. Others can now buy a car only every eight years as opposed to the current four years. The new rules will come into force on June 1.

The army said this order was prompted by the necessity to “ to regulate and balance the budget of CSD ( canteen sales department). ‘’ Cars are purchased from the CSD because service personnel get a sizeable discount which can run into a few lakhs depending on the model of the car. HT has a copy of the 24th May letter from the army’s Quartermaster General. This direction is not an austerity move as such because they are free to buy whichever car they want from the open market. However, officials confirmed to HT that most serving and retired personnel make use of the significant discounts they get in the canteen.

The rules specify that personnel below officer rank can now buy cars only up to an engine capacity of 1,400 CC and costing not more than Rs 5 lakh (excluding GST). They can purchase cars once during service and once after retirement. Officials explain that these curbs have become necessary because out of the Army canteen’s budget of ₹17,000 crore, a third is devoted just to car sales. The payment to car dealers becomes a problem due to the sheer volume.

“It has been decided to restrict the expenditure on purchase of cars, yet ensure that officers, junior commissioned officers and other ranks and their equivalent in the sister services continue to benefit from the relief in taxes available to service personnel and veterans,” the letter stated.

Singh has written to the Quartermaster General Lieutenant General R Gopal to withdraw the new policy as it will lead to “severe displeasure” among serving and retired cadres.

He said no feedback was taken “from the environment” before the promulgation of the new policy.

A former army commander, who did not wish to be named, said the new policy was unwarranted.

Army headquarters officials, who did not wish to be named, defended the move to restrict car purchase from canteens. “Last year, car sales were over ₹6,000 crore (a third of the CSD budget) resulting in the overshooting of budget and a carry over liability of payment to car manufacturers of ₹4,500 crore,” said one of the officials cited above.

Another official said while car sales across the country fell 17% in 2018-19, CSD car sales rose by 20%.