• Source:JND

With the deadline for filing Income Tax Returns (ITR) for the majority of taxpayers approaching–July 31, 2026- taxpayers in each Indian state are racing to complete their filings. Yet, did you know that in one Indian state, most residents are exempt from income tax? That state is Sikkim—the only one in the country where residents enjoy such an exemption, thanks to specific legal provisions.

What is the reason?

Sikkim was an independent kingdom, and it only became part of India after a referendum in 1975; it became India's 22nd state. During its merger, Article 371F was incorporated into the Constitution to safeguard the rights of its people and preserve its existing laws. This special provision granted Sikkim unique legal and administrative powers to protect its traditional systems and the interests of its local inhabitants.

Who is eligible for this privilege?

Subsequently, Section 10(26AAA) was added to the Income Tax Act, 1961, exempting the income of those officially recognised as 'Sikkimese' from income tax. This measure was designed to uphold the special rights of residents who were native to Sikkim before its merger with India.

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Exemption is not for everyone

However, it is important to clarify that this exemption does not apply to everyone living in Sikkim. It is reserved exclusively for those who legally qualify as Sikkimese. Individuals who have migrated to the state or do not fall within this specific category are subject to standard income tax regulations and may be required to file an ITR.

Ultimately, this is not a new government scheme or a recent tax benefit; rather, it is a cornerstone of the constitutional and legal agreement established during Sikkim's integration into India. Consequently, Sikkim remains unique as the only state in India where eligible residents benefit from these special income tax exemptions.


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