Shocking: How Is This Possible? You Can Earn Crores In THIS Indian State And Pay ZERO Income Tax But Only If…

While the rest of India rushes to meet the deadline for filing Income Tax Returns, Sikkim stands apart, untouched by the usual tax panic. The reason? Sikkim enjoys a special break under Section 10(26AAA) of the Indian Income Tax Act. Ever since Sikkim joined India, its residents haven’t had to pay income tax, an exemption put in place to keep the state’s old tax system alive.

Back before Sikkim became part of India, it had its own tax rules, and people there didn’t have to worry about Indian income tax. When Sikkim merged with India, the government decided to keep things as they were, handing Sikkim a unique exemption from national taxes.

No Income Tax in Sikkim

This special status got a boost in 2008. That year, the Union Budget wiped out the old Sikkim Tax Act and rewrote the rules through Section 10(26AAA) of the Income Tax Act. It was all about protecting Sikkim’s special place under Article 371(f) of the Constitution.

But things didn’t stay simple. In 2013, the Association of Old Settlers of Sikkim and others took their complaint to the Supreme Court. They challenged Section 10(26AAA), saying it left out two groups unfairly: Indians who had moved to Sikkim before the merger on April 26, 1975, and Sikkimese women who married non-Sikkimese men after April 1, 2008.

Who Is Eligible for Sikkim’s Tax Exemption?

So, what exactly does “Sikkimese” mean under this law? According to the Finance Act of 2008 (which actually applies from 1989-90), it covers people listed in the Sikkim Subjects Register before April 26, 1975, those added by government orders in 1990 and 1991, and anyone whose close family (like a father or husband) is on the register.

This covered almost everyone but not all. About one percent slipped through the cracks mostly Indians who moved to Sikkim before the merger but kept their Indian citizenship, so their names never made it onto the register.

Those excluded argued that this was both unfair and discriminatory. They wanted the exemption to include everyone who settled in Sikkim before April 1, 1975, even if their names weren’t on the register. And they said it made no sense to deny the exemption to Sikkimese women who married non-Sikkimese men after April 1, 2008.

The Supreme Court agreed, at least in part. A two-judge bench said it was flat-out discriminatory to deny tax exemptions to Sikkimese women who married non-Sikkimese men after April 1, 2008 especially since Sikkimese men who married non-Sikkimese women didn’t face the same rule. The judges called this a clear violation of the right to equality.

As for those Indians who settled in Sikkim before the merger but never got listed in the register, both judges agreed that denying them the exemption was wrong.

Justice MR Shah struck down the clause that kept them out. Justice BV Nagarathna, using her constitutional powers, told the government to add a new clause to Section 10(26AAA) so these people would get the same tax break. And until the law gets officially changed, she said, these individuals should still enjoy the exemption.

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