New Delhi, Dec 20 (UNI) The Reserve bank of India (RBI) has issued instructions to banks to advise the Defence Pension Disbursing branches not to deduct Income Tax from the pension paid to disabled personnel from the Armed Forces.
The instructions asked the banks to strictly adhere to the provisions of para 88.3 of Defence Pension Payment Instructions 2005, regarding exemption of Income Tax of the disability pension of the pensioners of Armed Forces.
An official release here said reports have appeared in the Press that some banks were deducting tax from pension of disabled ex-servicemen n violation of government instructions.
It said RBI was requested to have the matter investigated and remedial action taken. After examination, RBI discovered that in one specific instance, due to oversight, the pensioners disability pension was wrongly taken into account while calculating Income Tax.