India's Only Tax-Free State: Know the Rules for 100% Income Tax Exemption

New Delhi (The Uttam Hindu): This time the Income Tax Department has extended the last date for filing income tax returns to 15 September and people are submitting their income details to the department. But do you know that there is a state in India where there is no tax on income? Yes, this state is Sikkim, where the natives do not have to pay any kind of tax on their income.

Sikkim is the only state in India where the natives are completely exempted from income tax under Article 371(F) of the Constitution and Section 10(26AAA) of the Income Tax Act. When Sikkim became a part of India in 1975, it had its own administrative and tax rules. The Indian government had promised to maintain these rules, for which Article 371(F) was added to the Constitution.

Due to this article, the natives of Sikkim have got income tax exemption, which is still applicable today. According to Section 10 (26AAA), the income of the natives of Sikkim, whether it is salary, business, profit from shares, interest or income from investment, is not taxed in any way. This special provision has been made with the aim of protecting the cultural and historical identity of Sikkim, which distinguishes it from other states of India.

However, there are some rules for tax exemption on income in Sikkim. This exemption is not available to all the residents there. It is only for those people whose names are registered in the Sikkim Subject Regulation of 1961 and who are descendants of the people registered at that time. Newcomers or people who come from outside and settle in Sikkim are not entitled to this tax exemption.