Taxation under Agnipath Scheme
The Agnipath Scheme, effective from November 1, 2022, enables recruitment of Agniveers in the Indian Armed Forces for a tenure of four years. The scheme provides specific tax exemptions and deductions under the Income-tax Act.
Taxability of Payments to Agniveers
- Monthly Payments:
- Taxable under the head “Salaries” as per applicable tax rates.
- If the Agniveer is a minor at enrollment, this income is not clubbed with the parent’s income.
- Seva Nidhi Package (Lump-Sum Payment):
- Amount received by Agniveer from Agniveer Corpus Fund (Seva Nidhi Package) on completing the tenure of 4 years shall be fully exempt from tax under Section 10(12C).
- Exemption applies even if tenure is incomplete due to death or disability.
- Payments on Death of Agniveer:
- Insurance Cover: Insurance compensation by family members is exempt under Section 10(10D).
- One-Time Ex-Gratia and Pay for Unserved Period: Fully exempt as per CBDT Circular No. 573.
- Seva Nidhi Fund Balance: Fully exempt under Section 10(12C).
- Payments on Disability of Agniveer:
- Ex-Gratia: One-time ex-gratia amount received by an agniveer is exempt as per CBDT Circular No. 776.
- Pay for Unserved Period: Tax treatment unclear; exemption is recommended.
- Seva Nidhi Fund Balance: Fully exempt under Section 10(12C).
Tax Treatment of Contributions to Agniveer Corpus Fund
- Government Contributions:
- Treated as “Salary” for the Agniveer but fully deductible under Section 80CCH.
- Agniveer’s Contributions:
- Fully deductible under Section 80CCH.