The people of Sikkim do not have to pay any taxes. Sikkim is a completely tax free state. Because there is a special status in this state. There is no need to pay tax, no matter how much the natives earn here.
First Published Mar 15, 2023, 12:14 AM IST
Every year, employees struggle to figure out what to do to save tax. Tax saving schemes are all investments. Try as much as possible to invest tax free. They try to save tax by hiding as much income as possible.
But if there is a rule that there is no need to pay tax no matter how much we earn, we are sure to fly away. But such a provision is in force in one state in our country. Yes the people of Sikkim region do not have to pay any taxes. Sikkim is a tax free state and special status is in force in this state. There is no need to pay tax, no matter how much the natives earn here. Here not only income tax but also direct tax is not payable. However, they get all services from the government.
According to the Income Tax Act 1961 in India, every citizen has to pay tax according to his income. This Act has not been implemented in Sikkim. According to 372(f) of the Constitution of India, residents of Sikkim are not required to pay any income tax. This rule does not apply to all residents of Sikkim. Only original residents of Sikkim are exempt from tax.
Why people of Sikkim don’t have to pay taxes.. Sikkim was not part of India earlier. Before India’s independence, Jawaharlal Nehru, who was the Vice-President of the Executive Council, tried to convert Sikkim and Bhutan into Himalayan states. Sikkim-India peace talks were held in 1950. He assured that India will stand by any attack on Sikkim. Earlier Sikkim was a separate country like Bhutan. Sikkim had earlier independent rulers. Sikkim became part of India in 1975. In India, the Taxation Control Act, 1949 has been in force since. Sikkim was not a state of India then. Since Sikkim became part of India in 1975, the state has been given special status.
What Income Tax Rules are in force in Sikkim?: When Sikkim became a state of India, certain regulations were imposed in the name of the original inhabitants of Sikkim. Only they have this tax exemption. Section 10 (26AAA) is in force in Sikkim. Residents are not taxed here. Until 2008, only residents with special citizenship certificates were exempt from taxation. But after 2008 it included all original inhabitants of Sikkim. Family members residing in Sikkim since before 1975 get tax exemption. On the other hand, if a woman who is a resident of Sikkim marries a non-resident of Sikkim, she will not get tax exemption. Article 371A gives special status to all northeastern states. Sikkim is the only state to get tax exemption under this provision.
