My question specifically pertained to exemption of Income Tax to recipient of Gallantry Awards under the new dispensation which remains still to be answered?

Ans: I feel proud to reply this question. As per the information provided by the Honorable Government on the website -https://www.gallantryawards.gov.in.
Post-independence, first three gallantry awards namely Param Vir Chakra, Maha Vir Chakra and Vir Chakra were instituted by the Government of India on 26th January, 1950 which were deemed to have effect from the 15th August, 1947. Thereafter, other three gallantry awards i.e. Ashoka Chakra Class-I, Ashoka Chakra Class-II and Ashoka Chakra Class-III were instituted by the Government of India on 4th January, 1952, which were deemed to have effect from the 15th August, 1947. These awards were renamed as Ashoka Chakra, Kirti Chakra and Shaurya Chakra respectively in January, 1967.

Yes, Recipients of Gallantry Awards are given exemption as under,

Section 10(18) provides exemption in respect of pension received by armed personnel, being a winner of Param Vir Chakra, Maha Vir Chakra, Vir Chakra or any other gallantry award notified by the Government. The exemption has also been extended for the family pension, received by any family member of such armed personnel. Family, for this purpose, shall include his spouse, children (whether dependent or independent), parents, brothers and sisters, who were wholly or mainly dependent on him. Pension received by an individual who has been in the service of the Central Government or State government and has been awarded with "Param Vir Chakra" or "Maha Vir Chakra" or "Vir Chakra" or other notified gallantry award is exempt from tax under Section 10(18)(i).