Here’s why residents of THIS Indian state do not have to pay income tax

Image Source : FREEPIK Photo for representation only.

Sikkim, a small state in northeastern India, has been exempted from paying income tax, making it unique in the country. While every taxpayer in India is mandated to file their income tax returns annually, Sikkim has its own tax laws, which were set up in 1948, and it has followed these laws since 1975. These laws exempt all residents of the state from paying taxes to the Central government.

In 2008, Sikkim’s tax laws were repealed by the Union Budget, which exempted the state’s residents from paying taxes through Section 10 (26AAA) of the Act, which protects Sikkim’s special status given under Article 371(f). This I-T exemption was granted to over 94% of Sikkimese people by the Union government.

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Section 10 (26AAA) of the Act exempts the income earned by Sikkimese individuals in the state or through dividends or interest on securities from elsewhere from income tax. In addition, Sikkim residents are exempted from the mandatory PAN requirement for investments in the Indian securities market and mutual funds by the Securities and Exchange Board of India (SEBI).

In 2013, the Association of Old Settlers of Sikkim (AOSS) filed a petition challenging the exclusion of “old Indian settlers” from the I-T exemption, who had permanently settled in the state before 1975 when Sikkim merged with India. The Supreme Court in response directed the state to amend the Explanation to Section 10 (26AAA). The state was told to include a section to extend the IT payment exemption to all Indian citizens domiciled in Sikkim on or before April 26, 1975.

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FAQs

Q1: What is the special status of Sikkim in India?


Sikkim is a small state located in northeastern India that has a unique status in the country. It has its own tax laws, which were established in 1948.

Q2: What are some popular tourist attractions in Sikkim?

Sikkim is known for its scenic beauty and is a popular tourist destination. Some of the popular tourist attractions in the state include the Nathula Pass, Tsomgo Lake, Yumthang Valley, Rumtek Monastery, and the Kanchenjunga National Park.

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