<h1>RBI Orders Banks to Stop Tax Deductions on Disability Pensions for Ex-Servicemen; Follow Defence Pension Payment Instructions 2005.</h1> Some banks were improperly deducting income tax from the disability pensions of disabled ex-servicemen, contrary to government guidelines. The Reserve Bank of India (RBI) investigated the issue and found an oversight in one case where disability pension was incorrectly included in taxable income. RBI has now instructed all agency banks to follow the Defence Pension Payment Instructions 2005, which exempt disability pensions from income tax. Banks are advised to ensure their branches do not deduct tax from the disability pensions of Armed Forces pensioners.