Representative image

NEW DELHI: The government has asked the defence accounts department to withdraw its circular that directed banks to tax the disability pensions of soldiers, which had led to widespread outrage among veterans because the Supreme Court had ordered “status quo” should be maintained on the matter.

“The defence ministry has asked the Principal Controller of Defence Accounts (PCDA) to ensure the circular is kept in abeyance till the matter is decided by Supreme Court,” said a source on Tuesday. A veteran, in turn, said, “The government had no choice because it would have otherwise amounted to contempt of court.” As was reported by TOI on Monday, many disabled veterans had received only Rs 100 as pension in their bank accounts for the month of February, with retrospective TDS (tax deducted at source) being implemented by the State Bank of India.

This had come after the PCDA (pensions) on February 20 issued the circular calling for “necessary action” on the June 2019 order by the finance ministry/Central Board of Direct Taxes ( CBDT ), which had held that disability pension of all military personnel would now be taxed unless they had been forced or “invalidated” out of service prematurely due to the injuries.

The NDA government had faced a lot of flak from veterans for the CBDT order, though officials contended the Army headquarters itself initiated the move because it felt “broad banding and higher compensation awarded for disability with tax exemption” has led to a significant rise in personnel seeking it even for lifestyle diseases.

Veterans say the misuse of the system by a few personnel should not be used to target all genuine disability cases. “It’s ethically, morally wrong. We need to correct the system and not punish innocent disabled soldiers,” former Army chief General V P Malik (retd) had said.

