Who advised you, Finance Minister Nirmala Sitharaman, to strip tax exemption from disabled soldiers who chose to serve despite their disability? Under the Union Budget 2026, only defence personnel ‘invalidated’ out of service on account of disability will retain the exemption. Those who continue their service will not. Is this not a punishment for their loyalty?
Consider Lt Gen Vijay Oberoi, who lost his leg in the 1965 war shortly before his 25th birthday, chose to serve, and rose to become Vice Chief of Army Staff. Or Maj Gen Ian Cardozo, who, after stepping on a landmine during the 1971 war, amputated his own shattered leg with a khukri rather than risk capture. He went on to become the first war-disabled officer in the Indian Army to command a battalion, and later a brigade. Under your new framework, future officers who emulate their courage and serve a full career despite disability would be taxed on disability pension.
For over a century, from the 1922 tax framework to provisions of the Income Tax Act 1961, disability pension for injuries attributable to or aggravated by military service has remained fully tax exempt. Budget 2026 alters that settled principle from 1 April 2026.
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Creating two classes of disabled soldiers
The numbers tell a stark story. Around 40 per cent of retiring officers and nearly 18 per cent of Personnel Below Officer Rank (PBOR) receive disability pension. Most chose to continue serving despite permanent injury. Under the new rule, these soldiers will now pay tax on disability.
Disability pension is not income. It is compensation, a recognition of bodily sacrifice. It has two components. One is the Service Element, which is about 50 per cent of last drawn reckonable emoluments. The other is the Disability Element, about 30 per cent for 100 per cent disability (reduced proportionately, and not payable if the disability is assessed as below 20 per cent).
For many veterans, especially in the junior ranks, this is not additional income. It is lifelong support linked to permanent disability.
The policy creates two classes of disabled soldiers. Those forced out early keep their wounds tax-free. Those who stayed and served are taxed for endurance.
Why? What was the pressing need?
Article 14 of the Constitution guarantees equality before the law and equal protection of the law. When two soldiers suffer disability attributable to military service — one invalided out and the other retained in service — the disability, the sacrifice, and the cause are identical. Taxing one while exempting the other raises a serious question of arbitrary classification.
Article 21 protects the right to life with dignity. Disability pension is not a privilege. It is part of rehabilitation, dignity, and survival for those injured in national service. Taxing disability compensation risks undermining this constitutional protection.
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Is this taxable income?
Indian courts have repeatedly held that pension is not a bounty, but a right, a principle laid down by the Supreme Court in D.S. Nakara vs Union of India (1983). Disability pension, even more so, is compensatory in nature. Not income arising from gain, but restitution for loss of bodily function.
Assuming Rs 60,000-80,000 in annual tax per affected pensioner, the estimated revenue would be Rs 500-800 crore, less than 0.02 per cent of a Rs 50 lakh crore Union Budget. The nation is saving pocket change by taxing broken bodies.
What constitutional reasoning justified this distinction? Who examined rehabilitation wards before proposing it? Who measured the psychological cost of telling injured soldiers, “Serve fully, and you will pay for your wounds”?
A disability attributable to military service does not end at retirement. The wound does not vanish at superannuation. The prosthetic does not disappear. Why should the exemption disappear?
Budgets can be revised. Notifications can be corrected. Before drafting policy on disabled soldiers, policymakers must visit military hospitals, speak to amputees, meet veterans who cannot hear their children, and look into the eyes of those who stayed in uniform despite permanent injury.
Then ask honestly: Is this taxable income?
For less than 0.02 per cent of national expenditure, who advised taxing sacrifice?
The country does not need to know the name of your adviser. It only hopes that the next advice you receive remembers a simple truth: you cannot tax sacrifice, you cannot price pain, and you cannot reduce a soldier’s wound to revenue.
Ambreen Zaidi is an award-winning military author and activist, honoured by the President of India, for her work on war widows and disabled soldiers. Views are personal.
(Edited by Asavari Singh)