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Everyone is eyeing tax in the Union Budget of the country presented every year. People hope that the government will give some relief by reducing tax. But every year it is not necessary to make a big announcement in the budget. People coming under the purview of tax preview give a certain part of their earnings as tax, but there is also a state in India where the government does not charge tax. Yes, Sikkim is the only tax-free state in India. Now the question is why the North Eastern State Sikkim has been kept out of the scope of tax. Let’s know ..
Why is tax not charged?
Under Section 10 (26AA) of the Indian Income Tax Act, North Eastern State Sikkim is the only state in India which is exempted from tax payment. Sikkim was a former princely state for more than 330 years. However, Sikkim merged into India in 1975, making it the 22nd state of India. The merger took place on the condition that even after the merger in India, the old tax structure of Sikkim will continue. The tax rules of Sikkim say that the citizen here does not have to pay any tax to the Center despite his income.
What is Section 10 (26 AAA) of Income Tax?
Section 10 (26AAA) of Income Tax launched in 2008 (26AAA) states that any person living in Sikkim or any person of the state is exempted from paying tax on any income received through earning or interest. Has been. By 26 April 1975, any person living in the state of Sikkim will be exempted from paying tax. This status has been given to Sikkim under special status under Article 371 (F) of the Constitution of India. In addition, it is not mandatory for citizens of Sikkim to give PAN card for investment in Indian mutual funds.
When will this rule not apply?
This exemption is not valid on rental income or any income received from outside the state from properties outside Sikkim. This relief also does not apply to those who marry someone who is not a resident of the state after 1 April 2008. This argument was challenged in courts. However, the Supreme Court retained it in 2008 and the old rule applies here. Thus, people here are exempted from taxes but also have some conditions.
These people of other states were also given tax exemption
Indian taxpayers file ITR every 31 July, but residents of Sikkim do not do so. Apart from this, some population of other northeastern states has also been exempted from this. Of these, members of Scheduled Tribes in the states of Tripura, Mizoram, Manipur, Nagaland, Assam and Arunachal Pradesh are exempted from paying taxes. The tribals living in Ladakh region and Union Territory of Jammu and Kashmir do not have to pay tax.