No Income Tax Hassle in This Indian State: Not a Single Penny Spent from Your Pocket

Income Tax Rule: Did you know there is a state in India where eligible indigenous residents are exempt from income tax? In other words, native residents of this state do not have to pay income tax. Find out more.

Sikkim Income Tax Rule: July 31 was the deadline for filing Income Tax Returns (ITR). Consequently, a large number of taxpayers have already filed their returns. It is common knowledge that taxpayers are required to file their ITR within the stipulated deadline every year.

If you are employed or run a business, you likely file an ITR annually. However, if you were told that there is a state in India where eligible indigenous residents are exempt from paying income tax, many might be surprised, while others might be completely unaware of this fact. Yet, it is true. There is indeed a state in India where eligible indigenous residents enjoy an exemption from income tax.

Which state is this?

The state in question is Sikkim. It is renowned for its natural beauty and organic farming. However, very few people are aware that residents of this state are exempt from income tax. The state holds a special status under the Indian Constitution.

Exemption applies only to these individuals.

A question might arise in the minds of many: if a person from another state moves to Sikkim and settles there, would they also be exempt from paying income tax? The answer is no. This exemption applies exclusively to the eligible indigenous residents of Sikkim.

Exemption granted under this rule

Regarding the regulations, the exemption is granted under Section 10(26AAA) of the Income Tax Act.
This means that under this section, eligible indigenous residents are not required to pay income tax on income earned within the state.
Furthermore, there is no specified limit on the tax exemption provided under this rule. In other words, eligible indigenous residents of Sikkim are exempt from paying income tax, regardless of how much they earn while living in the state.

What is the reason behind this income tax exemption?

When Sikkim became part of India, specific rules were established for the state; under these rules, Sikkim was granted special status pursuant to Article 371(F) of the Indian Constitution. This is why eligible indigenous residents of Sikkim are exempt from paying income tax on their earnings.

Here are some key points to note:

Please note that the income tax exemption applies only to eligible indigenous residents of Sikkim.
Furthermore, this exemption applies only to income earned within Sikkim.
An individual who moves to Sikkim from another state to settle there will not be eligible for this benefit.
Such individuals are required to pay taxes in accordance with the country's standard income tax regulations.