Amid protests over removal of income tax exemption to a section of retired military personnel getting ‘disability pension’, it turns out the decision to bring in new rules originated after a report by the Comptroller and Auditor General (CAG) in 2023 cited a ‘high number’ of retirees getting disability pension.After the CAG report came out, the Department of Military Affairs (DMA) formed a panel that included the three services and the Department of Ex-servicemen. The CAG, in a report presented in Parliament, had raised concerns about pensions awarded to a “higher percentage” of officers, especially medical officers.The country’s top auditor had stated that 36-40 per cent of officers leaving service each year receive disability pensions, compared to 15-18 per cent of jawans. The CAG report noted a ‘significantly higher’ percentage of retiring medical officers (mostly doctors) receiving disability pensions – almost 44-58 per cent — medical officers retiring each year were getting disability pensions.Moreover, more than 22 per cent officers and 13 per cent jawans were getting disability pensions for lifestyle diseases like hypertension and diabetes, the CAG said. The disability pension is higher than the normal pension and is tax free.After the DMA panel gave its report, the entitlement rules for casualty pension and disability compensation awards to armed forces personnel, 2023, were promulgated by the Department of Ex-Servicemen Welfare, Ministry of Defence. These reinforced that ‘disability pension’ is awarded to those invalidated out and ‘impairment relief’ is given to those retiring with a disability attributable or aggravated by service conditions.Sources said the ministry was apprised how said officers nearing retirement were getting disability benefits for higher and tax-free pensions, warning about ‘fit’ getting placed in the lower medical category as they neared retirement.The aim of the study was to protect the genuine interests of pensioners who get disabled during service while preventing the exploitation of its liberal provisions from misuse, officials explained.Sources said the Income Tax Act, 1961, distinguished between two categories of disabled soldiers. First is those who get invalidated out on medical grounds attributable to or aggravated by military service and second are those retiring from service after completing their full tenure but have a disability.The logic of income tax exemption to invalidated service personnel was apparently based on the principle that a soldier suffering a disability while serving the nation should not be further burdened by taxes on the compensation provided for that disability.The provisions have now been introduced as an amendment in Clause 108 of Schedule III to the Income Tax Act for the forthcoming fiscal.