ITR Application 2025: This tax-free Indian country can also give you 100% income, even in tens of millions!
As the deadline for the 2025 ITR filing, taxpayers in India are busy calculating income, deductions and liabilities. But in Sikkim’s state, the process is very different. Here, eligible local residents pay zero income tax – their income has no income. This rare financial privilege makes Sikkim the only tax-free state in the country, supported by Article 371 (f) of the Constitution and Article 10 (26AAA). That’s why this exemption exists and qualifies.
Why don’t Sikkim residents pay income tax
Under the law, local Sikkim people’s income is completely tax-free. This means that a person living in Sikkim can earn a lot of money (whether from wages, business or investment) but still pay zero income tax.
Immunity is not a policy benefit, but a legal right granted under Article 371 (f) of the Constitution and Section 10 (26AAA).
The historical reasons behind the tax-free state of Sikkim
When Sikkim joined the Union of India in 1975, it had special conditions. When merged, Sikkim had its own administrative and tax laws. To respect this, the Indian government ensures that these laws will remain in place. Article 371(f) is added to the Constitution to maintain such an arrangement.
As a result, Sikkim residents were retained within the scope of Indian income tax laws and continued until today.
What does the Income Tax Law say?
Article 10 (26AAA) of the Income Tax Act of 1961 states that income obtained by Sikkim is exempt from tax. This includes:
- Wage income
- Business revenue
- Capital gains
- Dividend
- Interest on securities
There is no high income limit for this exemption. Whether a person earns Rs 5 lakh or Rs 5 lakh, the rule remains the same.
Who is considered to be a local Sikkim?
This tax cut does not apply to everyone living in Sikkim. It only works for those:
According to the Sikkim Theme Regulations, the subjects recorded as Sikkim, 1961
Be the descendants of these primitive residents
New immigrants or settlers, even if they live in Sikkim, are not eligible for exemptions.
What economic advantages does this offer?
Living under tax exemption allows local residents to:
- Keep more income
- Free deposit and investment
- Avoid the burden of tax plans or deductions
In short, this allows them to directly increase their disposable income, which is not seen anywhere else in India.
How is Sikkim different from other tax-free terms in India?
India does offer some tax exemptions in the case of a specific person in charge.
- Agricultural income
- Interests in NRE Accounts
- scholarship
- HUF income
- The share of profits of the partnership
But these are limited and conditional. Sikkim is the only state where the entire income of an individual can be exempted from residence and estate.
Sikkim’s permanent tax status
Sikkim’s tax exemption situation is not temporary. It is supported by the constitution and protected by law. This means that it cannot be changed through ordinary policy decisions or annual budgets.
This makes Sikkim one of the rare places in the world where residents can make money, but still does not belong to the income tax network.
Sikkim stands out as an extraordinary example of constitutional protection and financial autonomy. In a country with a major problem for most people, Sikkim continues to enjoy the benefits of zero tax liability, a privilege rooted in history and protected by law.
