return to news
  1. Upstox
    /
  2. News
    /
  3. Personal Finance News
    /
  4. Tax
    /
  5. Will my disability pension be taxed while filing ITR for FY 2025-26?

Personal Finance News

Will my disability pension be taxed while filing ITR for FY 2025-26?

balwant jain
By Balwant Jain

3 min read | Updated on June 13, 2026, 07:15 IST

Google
SelectUpstoxas yourPreferred news source
Copy link
Twitter Page
Linkedin Page
Whatsapp Page

SUMMARY

Taxability of disability pension for Armed Forces pensioners under Income Tax Return filing for FY 2025-26 (AY 2026-27) and related exemption provisions.

Will my disability pension be taxed while filing ITR for FY 2025-26?

Section 11 read with item no. 38A of Schedule III of the Income Tax Act, 2025 specifically provides for exemption for disability pension received only by the persons who have been forced out of service due to their disability. | Image: Shutterstock.

The tax treatment of the disability pension received by Armed Forces pensioners is relevant to the filing of the Income Tax Return for Financial Year 2025–26 (Assessment Year 2026–27). In view of ongoing discussions on the scope of exemption available under the Income Tax provisions, clarity is required on the correct tax position to ensure proper compliance.

Open FREE Demat Account within minutes!
Join now

Today's Q&A explains such details in response to a query by a reader.

Question: I am Lt Commander Kuldip Singh (Retd), an Armed Forces Pensioner. I am receiving a Retirement Pension with a Disability element. Both these pension elements were exempted from income tax since my retirement in the year 2002. However, I saw some media reports recently that Disability pension will no longer be tax-free. Kindly confirm whether my disability pension will be taxed during filing of ITR for FY 2025-26(AY2026-27)the the a ? No TDS has been deducted from pension.
Answer: The disability pension of defence personnel was exempt under the Income Tax Act, 1922. The same continued to be tax-free due to repeal and saving provisions for Income Tax Act, 1922 as contained in Income Tax Act, 1961. For long time, the,,,the disability pension for those who were forced out of service as well as those who continued in the service was exempt.

This exemption even continued after the government tried to limit the exemption availability only to those who were forced to retire due to their disability after the Supreme Court stayed the circular issued in 2019 by the Central Government.

This has changed with introduction of the Income Tax Act, 2025, which applies for financial year 2026-2027. Section 11 read with item no. 38A of Schedule III of the Income Tax Act, 2025 specifically provides for exemption for disability pension received only by the persons who have been forced out of service due to their disability. This exemption is no longer available to the pension received by those who continued in service after the disability caused during the service.

So your pension received during the financial year 2025-2026 enjoys the exemption but from the current financial year, the pension received by you comprised of disability and service element both, will become taxable.

Have a personal finance, mutual fund, or income tax query? We will try to get them answered by experts. Write to sangeeta.ojha@rksv.in
For all personal finance updates, visit here
Disclaimer: The views and opinions expressed above are those of respective experts/commentators and do not reflect the views of Upstox. The above Q&A is only for informational purposes and should not be considered investment or tax advice from Upstox. Please consult a tax expert for your complex tax problems.

About The Author

balwant jain
Balwant Jain is a Mumbai-based tax and investment expert.

Next Story