Tax-free Sikkim- Even if the income of a native of Sikkim is crores or billions of rupees, he does not have to pay even a single rupee as income tax to the government. Actually, due to a condition of merger of Sikkim in India, Sikkim is a tax free state.
New Delhi. In the new tax regime, Indian citizens do not have to pay any income tax on income up to Rs 7 lakh. But, there is a state in India where 95 percent of the residents do not have to pay even a single penny of income tax on their earnings worth crores of rupees. This state is Sikkim. The native residents here have been exempted from income tax (Sikkim Income Tax Exemption) since independence. However, now the demand is also being raised in the country to stop the exemption given to the people of Sikkim from paying income tax. Many people say that this exemption given to Sikkim residents is also being misused by outsiders to avoid paying income tax. Some people also call it the tax haven of India.
In fact, many states of the North-East have got special status under Article 371-F of the Constitution. Native residents of Sikkim are exempted from income tax under Section 10 (26AAA) of the Income Tax Act, 1961. That means the people of the state do not have to pay any tax on their income. After a decision of the Supreme Court, 95 percent of the population of Sikkim has been considered as indigenous people.
Earlier, only those holding Sikkim Subject Certificate and their descendants were considered natives. He was made an Indian citizen under the Sikkim Citizenship Amendment Order, 1989. But in one of its decisions, the Supreme Court has also given the status of original inhabitants of Sikkim to the people of Indian origin living in Sikkim till 26 April 1975 (a day before the merger of Sikkim with India).
Income tax exemption was included in the terms of merger
Sikkim is believed to be established in 1642. The complete merger of Sikkim into India took place in 1975. In the year 1950, Sikkim came under the protection of India with the India-Sikkim Peace Agreement. The Chogyal ruler of Sikkim had issued the Sikkim Income Tax Manual in the year 1948. There was talk of not collecting income tax from the people of the state in any way. The merger with India also included the condition of income tax exemption, which India also accepted. Keeping this condition in mind, under Section 10 (26AAA) of the Indian Income Tax Act, exemption from income tax was provided to the natives of Sikkim.
Demand is rising to end tax free status
The demand for abolishing the income tax exemption given to the residents of Sikkim also arises from time to time. BJP leader and advocate Ashwini Upadhyay even calls Sikkim a tax haven. There are frequent reports of misuse of income tax exemption. A case of opening of demat accounts in large quantities in the name of the people of Sikkim has also come to light.
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