The Union Finance Ministry is set to give approval to the Home Ministry’s proposal to grant tax exemption to personnel of paramilitary forces on risk-hardship allowance and ration money allowance.
In a recent response to the Home Ministry, the Finance Ministry is learnt to have conveyed that the longstanding demand of forces will be examined during the ensuing Budgetary exercise.
This was in reply to a communication from the Home Ministry, which raised the issue of tax exemption on ration allowance given to paramilitary personnel on the basis of parity with other uniformed forces and Pay Commission recommendations, officials said.
“Soldiers of Indian Army are entitled to military special pay (MSP), which is taxable. They are exempted from paying taxes on allowance, which is granted to them for serving at a post considered ‘life threatening,” a Defence Ministry official explained.
The move, once implemented, is likely to benefit more than 9 lakh Central Armed Police Forces (CAPF) personnel from CRPF, BSF, CISF, ITBP, SSB, and their families.
A senior Home Ministry official said, “The Finance Ministry has given an assurance to the Home Ministry that it would consider the demand to exempt ration money allowance and risk and hardship allowance granted to paramilitary personnel from the purview of income tax.”
Paramilitary personnel up to non-gazetted ranks such as constable, head constable, assistant sub-inspector, sub-inspector and inspector are entitled to monthly ration allowance of Rs 3,000. The quantum of risk and hardship allowance varies from Rs 6,000 to Rs 25,000 per month per head, depending on various factors.
In its report, the 7th Central Pay Commission has recommended that looking into the unique service conditions of paramilitary personnel, and since the ration money allowance (RMA) is granted in lieu of free ration, it should be exempt from income tax.
“A strong case exists for exempting RMA of paramilitary forces from income tax,” an official said. In addition to RMA, the Home Ministry in its letter to the Finance Ministry also raised the issue of exemption of risk and hardship allowance of paramilitary personnel from income tax, the official said.