Removing tax breaks on disability pensions The Statesman 24 Feb 2026

https://epaper.thestatesman.com/4121535/Bhubaneswar-The-Statesman/24th-February-2026#page/7/2

Removing tax breaks on disability pensions The Statesman 24 Feb 2026  

          The Finance bill 2026 aims to terminate income-tax benefits accruing from pensions of those who superannuated with disabilities in the armed forces. The supreme court has, over the years, insisted that disability pensions ‘are deferred compensation for past service and are neither dependent upon the grace of the State, nor barred by limitation.’ It adds that these are vested rights ‘earned through sacrifice in service of the nation.’

Courts have also insisted that individuals invalided out and those superannuating receive equal disability benefits. Faced with a slew of court cases on disability pensions, which it continues losing, the government chose the easy way out, regain some of it through tax. If the government simply stops challenging Armed Forces Tribunal decisions on disability pensions in courts, by hiring a battery of lawyers in every case, it would save much more than it would gain by imposing taxes on disabilities, thereby saving face. But it decided to take the easy way out.

          India is a nation which has always been in conflict, either within or with adversaries. The armed forces have been battling insurgencies for decades, commencing with the Naga National Council uprising, led by AZ Phizo, in the early 1950’s. These spread across the East and subsequently arose in Punjab and J and K. Each has been supported by our adversaries.

These insurgencies were contained at high cost to the armed forces who operated with one hand tied behind their backs, thereby suffering high casualties. It was this which created conditions for the government to regain control and in some cases ink ceasefire agreements. Figures of soldiers killed or wounded in containing insurgencies are unavailable but would be far more than casualties in wars.

           Every time a soldier steps out of his post, in an insurgency environment, even for a routine patrol, he needs to be prepared for an ambush or an encounter. This mentally affects some operating in such an environment and could manifest later in life in some form. This would never be understood by politicians taking decisions on disability pensions today.

          The Indian army has also fought multiple wars since independence, commencing from 1947-48 and the last in Kargil. Every conflict has casualties, wounded and killed. In 1971, India suffered around 3500 dead and 10,000-12000 wounded. Operation Pawan in Sri Lanka left over 1700 dead and 3500 wounded, while Operation Vijay in Kargil resulted in 527 dead and 1300 injured.

          India also possesses the most varied terrain in which troops serve, stretching from the Siachen Glacier to super high altitudes and extending to the deserts of Rajasthan and jungles of the North East. Each has its own peculiarities, impacting health of some who have operated there. This prevents them from leading a normal life. 

Some of those wounded or impacted by service conditions, though having some form of disability, including loss of limbs, remain in service, albeit with restrictions on employment. The armed forces, respecting those who suffered injuries in active insurgency and wars, do not deny them promotions, though restrict their employment.         

Those who have decided to serve despite having an option of being boarded out, have done so because for them the armed forces is a way of life, not just a career. Such passion amongst those in uniform can never be understood by a finance minister, whose job is juggling numbers, enhancing revenue and playing politics, despite having been a defence minister.

There is no doubt that disabilities have been exploited by a few to gain undue advantage post-retirement. However, those who have done so discovered their illnesses towards the fag end of their service, after having attained the highest position, they could garner. Punishing the masses, including genuine, because of a few who misused the system, based on their appointment, goes against the very ethos of justice. The finance ministry, in coordination with service HQs, need to evolve a methodology where genuine cases are separated from those who exploited the system. This is feasible and a better option than punishing everyone across the board.

Majority of our troops are from small cities and villages. For them wearing the uniform is a sign of pride. They believe that the government would care of its soldiers during and post service. This illogical finance bill would break this trust. Unless politicians understand the dedication and passion of a soldier, they will continue playing games with his life.

The global reputation of our armed forces flows from the determination and valour of our soldiers, not just quality of weapons. The soldier acts without concern for his own safety because he believes the government will care for him and his family in case he becomes a casualty. The PM and defence minister visiting troops on Diwali for a couple of hours and praising their efforts, does not display their respect for soldiers. It is only by ensuring that soldiers are looked after post-retirement, despite having disabilities which impede their daily life, would convince troops that the government and nation cares.

What the finance minister has done in this budget is highlight that sacrifice of a soldier is expendable. It has also sent the message that love for the nation, professionalism and willingness to serve, despite having disabilities, is a flawed approach. What the finance bill conveys is that if you are ever injured or have an opportunity, take disability and leave. This government has no respect for your dedication and sacrifice.

Taxing pensions with disability may not add much to the national exchequer, but conveys the true mindset of a government whose leadership regularly mentions that we stand with the soldier, but in reality, don’t. Institutions like the BCCI are untaxed on flimsy pretexts but a disabled soldier, who lost a limb in service of a nation is. What an irony.

The soldier will pay the tax, after all the finance minister demands it, but would always have the belief that the nation has backed down from its promise, solely because the finance minister needs a few extra rupees. The bill also conveys that soldiers who possess genuine disabilities are considered at par with those who misused the system. The finance minister needs to find realistic solutions to at least to protect the standing of the government, rather than terming disabled soldiers who serve as exploiters of the system.