Tax Free State: Generally, paying income tax is the responsibility of every citizen in India, but there is a state where people do not have to pay even a single rupee tax despite being millionaires. This state is Sikkim.
Why don’t we have to pay taxes in Sikkim?
The reason for exemption from income tax in Sikkim is historical and legal. When Sikkim merged with India in 1975, its citizens were given special protection. Under Article 371F of the Constitution, the people of Sikkim got many special rights including exemption from income tax.
Sikkim Income Tax Manual 1948
Under an old law ‘Sikkim Income Tax Rules’ implemented in Sikkim in 1948, the residents of Sikkim are exempted from the Income Tax Act imposed by the Government of India. Under this provision, the permanent residents of Sikkim do not have to pay any tax on their income, even if their income is in crores.
Who gets this discount?
1. Only the native residents of Sikkim are eligible for this exemption.
2. People who come from other states and settle in Sikkim do not get this exemption.
3. If a Sikkim resident goes to another state and earns money, tax may be applicable on him.
4. Although this provision is beneficial for the citizens of Sikkim, this topic has also been a matter of debate in other parts of the country. Some people consider it against the principle of equality of taxation. At the same time, the citizens of Sikkim consider this special exemption as a part of their cultural and political identity.