Exemptions and Allowances Available for the Armed Forces Personnel

Are Army Personnel Required to Pay Income Tax?

Yes, Indian Army Personnel are required to pay income tax to the government on the income earned by them. However, the Income Tax Department provides various special allowances to Army Personnel. These allowances are also exempt either fully or partially. In addition to the basic salary, there are various allowances as well as retirement benefits that are provided to armed forces employees. It is important to note that these exemptions are not only allowed under the old regime and not under the new tax regime.

Fully Exempt Allowances on Specific Components of Salary

The list of allowances given below is fully exempt in nature -

• Income Received on Behalf of Regimental Fund
  Income received on behalf of the Regimental Fund or Provident Fund established by the Armed Forces to ensure the well-being of their current and former members, as well as their dependents, is exempt from tax.
• Pension to Gallantry Award Winner
  Any person who has been awarded with a Paramvir Chakra, Mahavir Chakra, or any other gallantry award, who is or was an employee of the Central or the State Government, receiving a pension from an individual, is exempt from tax.
• Family Pension
  If any member of the armed forces passes away during duty, the family of the deceased receives a pension, called a family pension, as support for the loss. Such a pension is fully exempt from tax, and the family members are not required to pay any tax on the same.
• Income of the Corporation for Ex-servicemen
  The government sets up an organization to help ex-servicemen, as the earnings of these organizations are exempt from tax. These earnings are used to support the families of the deceased.

Partially Exempt Allowances for Army Personnel

The allowances given below are partially exempt (upto a certain limit) for armed forces personnel -

• Counter Insurgency Allowance
  People operating from distant regions away from a permanent house receive this allowance. This allowance is exempted upto Rs. 3900. However, the person receiving this allowance cannot claim border area allowance.
• High Altitude Allowance
  A person who is operating from high altitudes is eligible to receive this allowance. The tax exemption on this allowance is subject to the location of the army personnel and the conditions in which he is living.
  Exemption: 9000 - 15000 ft., upto Rs. 1060 per month
  Above 15000 ft., upto Rs. 1600 per month.
• Highly Active Field Area Allowance
  This allowance is provided to the members of the armed forces, subject to location and conditions. Allowance upto Rs. 4200 per month is exempted.
• Island Duty Allowance
  This allowance is provided to the members of the armed forces serving in the Andaman & Nicobar and Lakshadweep islands. Allowance received upto Rs. 3250 is exempt from tax.
• Transport Allowance
  Transport allowance is provided to army personnel to meet their travel expenses from their residence to the workplace and vice versa. The armed forces have specific rules for this allowance due to the difference in the nature of their postings and duties. The exemption under this section is available for disabled or blind taxpayers. The transport allowance is exempt upto Rs. 3200 per month.
• Uniform Allowance
  Armed personnel who are required to purchase or maintain their uniforms are provided a uniform allowance. This allowance is exempt upto the amount actually spent on the uniform. Therefore, if the allowance received is more than the actual amount spent, then the remaining amount is taxable.
• Disability Pension Indian Army
  Disability pension is an allowance provided to brave soldiers who have suffered disability on duty. The service component of the allowance is equal to the retiring pension, which is 50% of the last drawn emoluments. The disability component is 30% of the reckonable emoluments last drawn for 100% disability.

Section 80CCH of the Income Tax Act

A certain sum of the amount being contributed by the applicants and the Central Government to the Agniveer corpus fund, i.e., for the deceased army personnel. Such an accumulated amount can be given to the family of former army personnel. This benefit can be claimed as a deduction under section 80CCH.

ITRs for Army Personnel

The type of ITR that an army personnel can file will depend on the source of income.

• If you have income from salary, one house property, and interest income, then you must file ITR-1.
• If you have income from salary, more than one house property, and/or capital gain, then, you must file ITR-2.
• If you have income from salary and income from business/profession, then you must file ITR-3.

Chapter VI-A Deductions for Army Personnel

• Section 80C
  Army Personnel are allowed a deduction of upto Rs. 1,50,000 in total. Investments made in AFPP, AGIF, PLI, LIC, NSC, tuition fees, etc.
• Section 80D
  A deduction of Rs. 25,000 is allowed on payment of medical insurance for self, spouse, and dependent children. If the individual is 60 years of age or above, then the deduction is Rs. 50,000. An additional deduction of Rs. 25,000 is also available for medical insurance payments made for parents. If the parents are above 60 years of age, then the deduction available is Rs. 50,000.
• Section 80E
  Section 80E deduction is available on interest paid for education loans. There is no limit on the amount of deduction that can be availed. It can be availed of only for 8 years.
• Section 80G
  The deduction is available on donations made for specified funds and charities. The donation can be either 50% or 100%.
• Section 80TTA
  A deduction of upto Rs. 10,000 is available for the interest earned on a savings bank account in a bank, co-operative society, or post office account.

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