In the course of achieving victory in various wars that the nation has fought and also in combating the ongoing cross-border terrorism and insurgency, the Indian Armed Forces lose valuable lives while many suffer disability. Such men who are invalidated out of service require care and rehabilitation so that they could start a second innings in their lives.

Keeping this in view, the Armed Forces Flag Day is observed on December 7 every year. On this day, by displaying flags in red, deep and light blue colours which represent the three Services the citizens reinforce their solidarity with the Armed Forces. In some places, Armed Forces formations and units conduct shows to motivate people for the welfare of the men-in-uniform. This helps to boost the morale of the forces and also gives them a sense of assurance that the entire nation is behind them.

On this day, the community, in an effort to supplement the government's efforts to the welfare of the troops, contributes to the Armed Forces Flag Day Fund. The contributions of public towards this fund is collected throughout the country. The fund is operated by Defence Minister at the centre and Governor at the state level. Kendriya Sainik Board is responsible for administration of Armed Forces Flag Day Fund. Contributions made towards Armed Forces Flag Day Fund are exempt from income tax.