Tax free State Sikkim: Sikkim is one such state in the country where people do not have to pay even a penny in the name of tax. Even if they earn crores of rupees. The reason for this is that when Sikkim was merged in India, a condition was added to it. Under this, now the people of Sikkim are tax free.
Tax free State: The countdown to the last day of filing income tax is on. Only one day is left. We all know that 31st July is the last date to file returns. In such a situation, people who come under the purview of income tax. It is necessary for them to file tax under the Income Tax Act 1916. But Sikkim is a state in India, where even if the people earn crores of rupees, they do not have to pay even a penny in tax. That is, the people of this state are far away from the matter of tax. 95 percent of the population here is out of the tax purview.
The natives of Sikkim have been getting income tax exemption (Sikkim Income Tax Exemption) since independence. However, now there is a demand in the country to stop the exemption given to the people of Sikkim from paying income tax. Many people say that the natives of Sikkim are misusing this exemption. Outsiders are also taking advantage of this. Some people also call it India’s tax haven.
What is the reason for being a TAX Free State?
Sikkim remains the only tax free state in the country due to a condition. Actually, Sikkim merged with India in the year 1975. At that time, the condition was kept that they want to adopt the old law only. To maintain its special status, Sikkim refused to adopt Section 1916 of the Income Tax Act. India also accepted this condition. Because of this, Sikkim is a tax free state under Section 10 (26AAA) of the Income Tax Act 1961. Let us tell you that Sikkim has got special status under Article 371-F of the Indian Constitution.
What is the rule under Section 10 (26AAA)?
Under Section 10 (26AAA), a resident of Sikkim will not be included in the scope of income tax. Those who are residents before the merger of Sikkim in India are exempted from tax under Section 10 (26AAA). Irrespective of whether those persons are part of the register of Sikkim Subjects Regulations, 1961 or not.
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