Which State is Tax Free in India: Is there any state in India where income tax is not paid? Are all the people living there tax free? Will I get the benefit of tax exemption if I go from other states and settle there or do a job? After all, who gets this special discount and what are the rules behind it?
Income Tax Free State in India: Every year lakhs of people pay income tax. When tax and TDS are deducted from salary or earnings, the heart sinks. As soon as the new financial year starts, taxpayers start trying to somehow save a little tax. But do you know that there is a place in our own country India, where whether people earn Rs 1 lakh or Rs 1 crore, they do not have to pay even a single rupee of income tax to the government. This is not a joke but absolutely true. There is a state in India where the income tax for its natives is zero. Let us know which place is this and what is the real reason behind non-payment of tax here…
Which is tax free in India?
We are talking about Sikkim. This state, famous for its mountains and beautiful valleys, is not only special because of tourism, but there is also a tax rule in place here which makes it different from other states of the country. However, it is very important to understand one thing here. Not everyone living in Sikkim can avail this facility. There are some special conditions for this.
Why is Sikkim exempted from paying taxes?
Sikkim was not always a part of India. It became the 22nd state of India after the referendum in 1975. At the time of its accession to India, some special provisions were made to protect the identity, culture and rights of the indigenous people of Sikkim. Under these arrangements, tax related exemptions were also given later. This is the reason why even today some eligible people get relief from income tax.
Who does not have to pay income tax?
Under Section 10(26AAA) of the Income Tax Act, only ‘people of Sikkim’ are considered eligible for this exemption. Meaning, this exemption is available to those people who are natives of Sikkim and who fulfill the conditions set in the law. Such eligible people do not have to pay income tax on certain types of income, dividends and interest.
Will I save tax by going and living in Sikkim?
If someone from Delhi, Mumbai, Lucknow, Patna or any other city of the country goes to Sikkim and starts a job or buys a house, he will still have to follow the normal income tax rules. No one can escape this tax exemption just by living in Sikkim. If you do not fall in the category mentioned in the law, then you will have to pay tax like other Indian citizens.
What benefit does Sikkim get from this?
When a large part of people’s income remains with them, its impact is also visible on the local economy. Having more money with people boosts local markets, small businesses, tourism and other economic activities. This is the reason why this system is not limited to just tax relief, but also helps in the economic strength of the state.
Is there such a rule in any other state of India?
There are many legal ways to save tax in the country. People take advantage of different investment options and tax exemptions. But there is no such rule for people of any other state. This is the reason why this rule of Sikkim remains a topic of discussion among the people even today.