The Central Government on Tuesday has asked banks to refund the tax collected on the disability pension.
"To mitigate the current hardship, banks have been advised to refund tax collected on the disability pension and not to affect any further recovery," the government sources said.
"Disability pension granted to veterans, who need regular medical care is being ensured. The government is conscious of the fact that recovery of tax on the disability pension in a lump sum by the bank has caused anguish to the pensioners," they had said earlier.
Last year, there was a huge outcry when the Finance Ministry had taken a decision to tax the Army personnel receiving a disability pension.
The reforms planned by the Army on the issue of disability pension caused much discomfort to a section of the officers from defence services and retired officers.
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