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Disability pension to retired army employee

Sushil Kamal (90 Points)

06 October 2018

wheather disablity benifit and pension given to retired army employee be taxable or not.. please answer

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195640 Points)
Replied 06 October 2018

Yes, disability pension given to army personells is tax-exempt under income tax.

INSTRUCITON NO 2/2002 F. No. 200/51/99-ITA Government of India Ministry of Finance

Department of Revenue Central Board of Direct Taxes New Delhi. The 2nd July, 2002.

To, All the Chief Commissioners of Income - tax,

All the Directors General of Income-tax,

SUBJECT: Exemption from income tax to disability pension “disability element” and “ service element” of a disabled officer of the Indian Armed Forces – Instructions

Sir,

1. Reference have been received in the Board regarding exemptions income tax to disability pension i.e. “disability element” and “service element” of a disable officer of the Indian Armed Forces.

2. It appears that field formations in certain cases are not unitary allowing disability pension in spite of Boards – Instruction No 136 dated 14thJanuary, 1970 [F.No.34/3/68-IT(A.I) 3. The matter has been re-examined in the Board and It has been decided to reiterate that the entire disability pension, i.e. “disability element” and “service element” of a disabled officer of the Indian Army Forces contains be exempt from income tax. 4. This may be brought to the notice of all the officers working under your charge.

Yours faithfully

1 Like

Sushil Kamal (90 Points)
Replied 06 October 2018

Thankyou sir.. sir maine dekha hai aap har kisi k question ka answer dete ho.. I am very inspired by you.. I want to be like you but i know i cant... lekin sir i will try k agr aapke jitna to nhi bs agr apka 1% b sikh jau to khud ko lucky smjunga

1 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195640 Points)
Replied 06 October 2018

Sabse pahele me upper wale se dua karunga ki Aapko mujse bhi jyada kamyabi bakshe.

Me bhi aap hi ki tarha ek Insan hu, aur jo kuch bhi ban paya hu woh upper wale ki dua aur aapni mehnat se. Sachche dil se mehnat karte jao, aur hamesha aageki socho.

Don't say you can't. Just repeat 'I will try & try, and I will succeed'. .... Me imandarise kahta hu (due to present circumstances) aajse 50 sal ke bad (my practical life), aap merese kaee jyada knowledgeable person hoge.... Good Luck & God Bless......

2 Like

Sushil Kamal (90 Points)
Replied 06 October 2018

thankyou sir thankyou very much.. sir agr aap bura na mane to kya pls muje sec 50C smja skte h mne query b dali hui h but kisine reply nhi kiya muje aaj is section ki bhut zrurat h but smj nhi aa rha sir..

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195640 Points)
Replied 06 October 2018

"Purchase of land on 31-10-2012 for 550000 and sale value on 07-11-2017 is rs 352000 what will be the treatment of section 50C ??"

Here, where is the question of applicability of section 50C?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195640 Points)
Replied 06 October 2018

What is Section 50C?

With effect from 1st April 2003 i.e. from A.Y. 2003-04, Section 50C of Income Tax Act, 1961 states that if the value stated in the instrument of transfer is less than the valuation adopted or assessed or assessable by the stamp duty authorities, such valuation of the stamp duty authorities will be considered as the sale consideration for the purpose of computation of capital gains arising on transfer of land or building or both. Hereby this provisions apply to transfer for a consideration of land or building if only held as capital asset at the time of such transfer. Thus, transactions of flats, shops, galas, factories being parts of buildings, etc. are covered by the provisions of section 50C.
Value “assessable” by the stamp valuation authority basically means that the price which would have been adopted/assessed had the transaction been referred to such valuation authority for the payment of stamp duty., as per amendment in 2009. Prior to this it had been held in many cases that the transfer of property must first be registered for the purpose of payment of stamp duty. Now, by virtue, of this amendment, the income-tax authorities are free to refer the property to stamp valuation authority irrespective of whether the same has been registered for stamp duty purposes or not.

Sushil Kamal (90 Points)
Replied 06 October 2018

sir 550000 is the stamp value of land and i camt understand what is cascading effect of sec 50C on both on buyer and seller interlinked with sec 56 and section 43CA

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195640 Points)
Replied 06 October 2018

On receipt of valuation report from the Valuation Officer, the Assessing Officer has to compare the fair market value as determined by the Valuation Officer with the valuation done by the Stamp Valuation Authorities under the Stamp Duty Act and with the apparent sale consideration shown by the assessee in the sale deed;
Where valuation done by the Valuation Officer is more than the valuation done by the Stamp Valuation Authorities (SVA) then valuation done by the SVA would be taken as full value of consideration and capital gains will be calculated accordingly;
If valuation done by the Valuation Officer is less than the valuation done by the SVA then valuation done by the Valuation Officer would be adopted as full value of consideration as against the apparent consideration shown by the assessee or the valuation done by the SVA and capital gains be calculated accordingly;
lf valuation done by the Valuation Officer is less than the valuation done by the SVA as well as sale consideration shown by the assessee in the sale deed then apparent consideration shown in the sale deed would alone be accepted as full value of consideration and capital gains be calculated accordingly, i.e. as shown by the assessee.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195640 Points)
Replied 06 October 2018

Don't consider sec. 43CA here, its for builders & developers, considering the sell of 'stock in trade'.

For sell/transfer of capital assets as above, if SDV is 5.50 lakhs, and the purchaser has paid say, 3.50 lakhs..... the AO can add balance 2 lakhs as capital gains to seller..... and on other hand similar amount is added to purchaser under IFOS u/s. 56(2)(x). (here recent amendment in the sec. not considered)

Sushil Kamal (90 Points)
Replied 06 October 2018

but sir if balance 2 lakhs will be added to seller then selling price will be 5.50 lakh and purchase cost will be 5.50 lakhs hence there is no gain to seller(according to me) and seller does not have to pay income tax on this sale only buyer will have to pay income tax on 2 lakhs u/s 56(2)(x)..... am i correct sir ?? please confirm me

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195640 Points)
Replied 06 October 2018

Here, the sections are applicable to both simultaneously and are independent to each other, and hence both are at loss. (To curb such activity its taxed at both end)

Sushil Kamal (90 Points)
Replied 06 October 2018

sir please kya aap muje ye hindi me smja skte hain k dono ko kyu tax lgega

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195640 Points)
Replied 06 October 2018

SD Value 5.50 lakh....

Transacttion carried out at 3.52 L

Stamp duty paid on 5.50 lakhs transaction value.

Seller received 3.50 lakhs by banking mode.

Balance amount is deemed to be received by unaccounted cash.

Seller may declare capital gains based on 3.52 L, which is not accepted by AO and adds cash amount of 2 lakhs for calculating capital gains, based on sell value as 5.50L (sec. 50C triggers)

Buyer paid 3.52 L by cheque/DD and as per sec. 56(2)(x), got the benefit of 2 lakhs (by paying such amount less than SDV). This benefit is treated as IFOS, and taxed accordingly over buyer.