Indian Army personnel play a crucial role in defending the nation, and understanding their income tax obligations and exemptions is vital. This article delves into the taxability of earnings for Army personnel in India, including exemptions granted under various sections of the Income Tax Act.
Whether Indian Army personnel are liable to file Income Tax Returns annually?
HERE ARE SOME THINGS YOU MUST KNOW….
Answer is YES, the earnings of the Indian Army are Taxable and are required to pay liable taxes to the Government.
However, (ITAT) Income Tax Appellate Tribunal Delhi Branch has stated that the exemptions would be applicable to Defence Force personnel.
The basic salary of Indian Army soldiers ranges from INR 25,000 to INR 90,000 per month, depending on their rank and years of service served.
Moreover, to the basic salary, they are entitled to various allowances such as dearness allowance, field area allowance transport allowance free medical facilities, canteen facilities, and accommodation.
The Indian Army also offers various retirement benefits such as pension and gratuity, ensuring financial security for soldiers after their service.
Below are the Exemptions available on specific components of income of Army Personnel –
- Income received on behalf of Regimental Fund [Section 10(23AA)]: Income received on behalf of Regimental Fund or Provident Fund established by the Armed Force for the well-being of present or former member or their dependents is exempt from the tax.
- Pension to Gallantry Award Winner [Section 10(18)]: Person awarded the Param Vir Chakra, Maha Vir Chakra or any other gallantry award and is or was the employee of Central Government or State Government receiving the pension by an individual are exempt from tax.
- Family Pension [Section 10(19)]:Any member of Armed Force passes away while on duty, the family members of the deceased personnel shall receive a pension known as a family pension to support their loss. Such a pension is fully exempt from tax and the family members are not liable to pay any taxes on such income.
- Income of Corporation for Ex-servicemen [Section 10(26BBB)]: An organization is set up by the government to help ex-servicemen as the earnings of these organizations are exempt from tax and such earnings are used to help the families of deceased.
Other than these, there are some allowances that are tax-exempt:
- Counter-insurgency Allowance: People who are operating from distant regions away from a permanent base.
Exemption – Upto 3900/- per month
Conditions: A person availing such allowance cannot avail border area allowance.
- High Altitude Allowance: A person who is operating from a high altitude, subject to locations and conditions.
Exemption – 9000 – 15000 ft – Up to 1060/- per month.
Above 15000 ft – Up to 1600/- per month.
- Highly Active Field Area Allowance: Provided to members of armed force, subject to locations and conditions.
Exemption – 4200/- per month.
- Island Duty Allowance – Provided to members of Armed Force serving in Andaman and Nicobar and Lakshadweep Islands.
Exemption – 3250/- per month.
80 CCH of Income Tax Act
Certain sum of the amount being contributed by the applicants and Central Government to the Agniveer Corpus Fund i.e. for the deceased army personnel.
Such accumulated amount shall be given to the family members of former army personnel. Such benefit shall be deductible u/s 80 CCH.
Relevant ITRs for Army Personnel.
The type of ITR will depend upon your sources of income.
1. Income from Salary, one house property and interest income – ITR-1
2. + more than one house property and/or capital gain ITR-2
3. + income from Business – ITR-4
Conclusion: Understanding the tax implications for Indian Army personnel is essential to ensure compliance and optimize tax savings. By leveraging exemptions and deductions provided under the Income Tax Act, Army personnel can manage their tax liabilities effectively while securing financial benefits like pensions and allowances. This comprehensive guide clarifies the nuances of income tax for Army personnel, supporting their financial planning and compliance efforts.
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Authors:
Gyanesh Shukla | Partner | gyanesh.shukla@bilimoriamehta.com | +91 88987 73607
Vanshika Gandhi | Associate Consultant
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