After tax deduction shocks veterans, MoD tries to fix issue

Defence Secretary Ajay Kumar. Twitter/@drajaykumar_ias  

Several veterans entitled to disability pensions had a shock when they received just few hundred rupees in their bank accounts as pension for the month of February. This was due to an order by the Principal Controller of Defence Accounts (PCDA), Allahabad, to deduct tax on disability pensions despite assurances to the contrary by the government and an order by the Supreme Court.

“There is a status quo by the Supreme Court on the matter and the PCDA has still gone ahead and issued the circular,” a Defence official said on Monday on condition of anonymity. It is also a violation of a Reserve Bank of India directive against deduction of TDS (tax deducted at source) in one go, he stated.

‘Widespread outrage’

Senior Defence Ministry and Army officials have discussed the matter with the State Bank of India (SBI) and also with concerned officials, another Defence official said, adding, “After widespread outrage on social media, Defence Secretary Ajay Kumar also sought details from veterans. The issue should be resolved in a few days.”

According to several veterans, the PCDA issued a circular dated February 20 for “necessary action” notification dated June 24, 2019 by the Central Board of Direct Taxes (CBDT), Ministry of Finance, which said tax exemption would be available only to Armed Forces personnel who have been invalidated from service and not to personnel who have been retired on superannuation or otherwise.

However, after strong reactions from the military fraternity and on social media, the government clarified that it would look into the matter and that the issue has also been sub judice.

Retrospective deduction

Following the PCDA order, last week, SBI deducted TDS on disability pension retrospectively for the this financial year. However, other banks had not implemented the order. Since then, some veterans have served a legal notice to the PCDA over contempt of the Court order.

“SBI implemented the taxation policy retrospectively, calculated tax arrears and deducted the entire pension for the month. To keep the zero balance account ‘alive’, they credited ₹100 in the pension account,” Colonel R. Ramesh, a veteran, explained in a long post on social media.

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Printable version | Apr 13, 2021 7:50:34 PM |

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