EXPLAINER ON THE CONCEPT OF DISABILITY PENSION, INVALIDATION AND THE RECENT CONTROVERSY OVER
THE TAX EXEMPTION THEREUPON, VIEWED HISTORICALLY
Though I would be soon
writing a detailed opinion piece again on military disabilities and our faulty
approach on the same, it becomes important to put out some data and a few historical facts on the recent
controversy.
The CBDT Circular: The
CBDT has recently issued a circular stating that Income Tax Exemption on disability
pension would only be allowed to those disabled personnel who are invalided from
military service and not to those who are released on completion of tenure or
superannuation. It seems that the term ‘invalided’ has been taken by the CBDT
to mean those who are medically boarded out prematurely from military service
before their actual retirement, discharge or superannuation. The controversy
over this term is however not new. However, it becomes important to clarify
this issue in its historical perspective since some of this information would
not be available with the Finance Ministry, the CBDT, the Ministry of Defence
and even the Defence Services.
History of Disability
Pension: Wound, Injury and Disability Pension has remained applicable
to military personnel (combatant as well as non-combatants and even ‘private
servants’ of officers during old times), in one form or the other since the
days of the Crown. As the terminology suggests, it was granted for disabilities
suffered during the course of service or illnesses incurred while in service.
The term ‘Invalid’: The
term invalid or invalided in military parlance simply referred to a person who
became an Invalid (disabled) while in military service. It had no connection
with “invaliding ‘out’ prematurely from military service”. A person who was
disabled while in military service was termed as an Invalid and when such a
person was discharged, whether prematurely or on completion of his terms, he
was discharged through a medical board and termed “invalided from” service (and
not invalided ‘out’ of service).
Exemption of Income Tax, 1922: Income
Tax was exempted in the year 1922 for invalid soldiers and the same terminology
as above was used in the applicable military instructions as well as the exemption
granted by the Finance Department.
Governor General’s Orders of
1926: Disability Pension attained exalted status in the year
1926, when GM Young, the then Secretary to the Government of India, Army
Department, issued a notification in the name of the ‘Governor General in
Council” stating therein that no public claim or public debt shall be recovered
from the Wound, Injury or Disability Pension of an officer or soldier. It may
be noted that this was applicable to disability pension across the board and
the term ‘invalided’ was not even pressed into service.
Confusion caused by 1940
Regulations: The confusion on the term ‘invalided’ however
raised its ugly head when Pension Regulations, 1940, were published. Here, the
term ‘invalided’ was used in provisions related to disability pension giving an
impression that the term applied only to those who were prematurely boarded out
of the military. Although, the same regulations in the same breath also stated
that a person retiring on completion of service limits would be granted
benefits ‘as if he had been invalided’, again multiplying the confusion.
Corrective action by
Government of India to clear the confusion: The problem created
by the original (correct) definition of ‘invalided’ as also signified by the notification issued by the Secretary,
Army Department, and the one that came to be incorrectly understood by military
accountants due to the publication of Pension Regulations 1940, however was
resolved by the Government of India once and for all in the year 1950 when the Entitlement
Rules, 1950, were promulgated and it was specifically underlined and provided
that the term ‘invalidation’ for the
purposes of disability pension shall mean all military personnel who at the
time of release from service are in a medical category lower than the one in
which they were recruited. Meaning thereby, all Low Medical Category personnel
who were fit at the time of entry into service were conclusively declared to be
falling under the category of ‘invalidation’ thereby bringing the definition
back to its origins. These Rules of 1950 were officially appended with the
existing Pension Regulations by the order of the Central Government. This was
further provided in Ministry of Defence Letter No A/22255/AG/PS4 (d)/2725/Pen-C
dated 05 November 1969. The same was reiterated later in the form of Rule 4 of Entitlement
Rules, 1982. Needless to state, this action was very important and required
since there can be multiple categories of disabled personnel within the Army
and to perpetuate discrimination amongst them based upon the type of exit from
service would amount to hair-splitting. Some such categories are- those who are
prematurely boarded out since they are unable to cope up with life in the military
after getting disabled, those who opt to continue and serve despite the disability
and then retire on regular completion of terms/service limits, those who are discharged
since no ‘sheltered appointment’ is available, those who opt out of service
because of lack of promotion due to disability, those who are not promoted and
hence retired early at the age prescribed for lower ranks etc
Litigation: The
discrimination between disability benefits between those who are prematurely medically
boarded out and those who opt to continue to serve the nation despite the
disability also became a subject of many a litigation. Some such examples are
Civil Writ 2967/1989 Mahavir Singh Narwal Vs Union of India as affirmed by the
Supreme Court in SLP 24171/2004 disposed on 04 Jan 2008 wherein the Delhi High
Court explained and interpretation the term ‘invalidation’ and the decision of
the Supreme Court in Civil Appeal 418/2012 in Union of India Vs Ram Avtar and
of course in Civil Appeal 5591/2006 KJS Buttar Vs Union of India.
Going back to the confusion
of 1940: The term “invalidation” is hence adequately defined by
the Rules of the Government and interpreted by Constitutional Courts. The CBDT,
it seems, has however restrictively interpreted the term as per its confused definition
as it existed between 1940 (When Pension Regulations, 1940 were promulgated)
and 1950 (When Entitlement Rules, 1950 were put into force to clarify the term ‘invalidation’).
Demonisation of military
disabilities: What we also see today is unnecessary demonisation
of military disabilities. The incidence of aggravation of disabilities in
military personnel is much higher than civilian employees simply due to the reason
of frequent movements and unsettled life (which ironically continues even in peace
family stations due to an extreme shortage of family accommodation), regimented
lifestyle and barrack life away from family, inability to cater to domestic
commitments, inability to fulfil sexual desires, curtailment of freedoms, applicability
of a disciplinary code 24X7, exposure to stressful situations including operational
areas etc. Disability hence is not a sign of weakness and even the bravest of
the brave battle-hardened soldier can fall prey to it. As far as the rumour of
Generals cornering disability claims is concerned, the incidence of a disability
incurred in-service is bound to be higher in senior ranks simply because they
retire in their late 50s (upto the age of 60) while soldiers start retiring in
their 30s. The allegation of ‘fake’ or ‘feigned’ disabilities (though not the
reason for the CBDT Circular) is also laughable since the incidence of disability
is first endorsed by an Initial Medical Board, then by re-categorization
medical boards and then finally by the Release Medical Board at the time of
retirement. There are hence multiple doctors, all different and at different
locations in the country, who endorse the existence of a medical condition and
its percentage. So far as the thought as to why aggravated disabilities such as
heart disease, hypertension, depression, neurosis, psychosis etc are eligible
for disability benefits is concerned, the same is not some kind of a favour to
our soldiers since it is provided in pensionary rules for military as well as
other uniformed personnel that such disabilities are affected by stress and
strain of service and eligible for disability benefits.
Rules for disability benefits in India
Disabilities in other
democracies, their incidence and tax status: In this context, it
would be instructive to examine military disabilities in other nations. An apt
example would be the US which also has an operationally committed military and
the pension rules are pretty much similar to ours and numerically the active
duty personnel are roughly the same. As per the official data maintained by the
Government, the incidence of disability in the military has gone up in the US by
117% from 1990 to 2018. Also, a total of
4.75 million veterans in the US are in receipt of disability benefits (See official data here).
In our country, the number of disability
pensioners is estimated to be less than 0.2 million. The disability pension and compensation in the
US is exempted from Tax as provided by Publication 525 of the Internal Revenue
Service.
Should we be concerned about the rise of incidence of disability in our soldiers and their
deteriorating health profile and provide them with comfort, care and succour, or should
we denigrate those who are suffering from illnesses and rather count pennies? More
than others, I ask this from the serving military fraternity.
Veterans with Disability Benefits in the US
Tax Exemption to disabled veterans in the US
The above is meant to
clarify the technical and factual details on the subject since most of the
debate on the matter was following an emotional track. Emotions and high
sounding words like ‘sacrifice’ etc etc aside, the matter has to be dealt under
the right technical perspective and I am personally sanguine that the political
executive would be able to address this issue if provided the correct inputs
and data.
Thanks
Navdeep.
