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Budget 2025: Only tax-free state in India where residents need not to pay Income Tax

Income Tax in India is a direct tax levied by the Government of India on the income earned by individuals, businesses, and other entities. The tax is collected as per the provisions of the Income Tax Act, 1961, and administered by the Central Board of Direct Taxes under the Ministry of Finance.

anurag-roushan
Edited By: Anurag Roushan @@Candid_Tilaiyan
Published on: February 01, 2025 19:29 IST
Taxpayers, particularly middle tax, got big relief as Finance Minister Nirmala Sitharaman presented her eighth Union Budget on February 1, 2025. In her budget speech, she announced that no income tax will be payable on income up to Rs 12 lakh. This limit will be Rs 12.75 lakh rupees for salaried tax payers counting Rs 75,000 of standard deduction. She also stated that the new income tax regime will be simpler, with a special focus on benefiting the middle class.
1/8 Image Source : PTI
Taxpayers, particularly middle tax, got big relief as Finance Minister Nirmala Sitharaman presented her eighth Union Budget on February 1, 2025. In her budget speech, she announced that no income tax will be payable on income up to Rs 12 lakh. This limit will be Rs 12.75 lakh rupees for salaried tax payers counting Rs 75,000 of standard deduction. She also stated that the new income tax regime will be simpler, with a special focus on benefiting the middle class.
Every year, when the Union Budget is presented, one of the most eagerly awaited announcements is regarding income tax. Since income tax directly affects salaried employees, professionals, business owners, and retirees, it has a widespread impact on people's financial planning and overall economic sentiment. But do you know, there is a state in India where residents are exempted from paying taxes? Let's know about it.
2/8 Image Source : Social Media
Every year, when the Union Budget is presented, one of the most eagerly awaited announcements is regarding income tax. Since income tax directly affects salaried employees, professionals, business owners, and retirees, it has a widespread impact on people's financial planning and overall economic sentiment. But do you know, there is a state in India where residents are exempted from paying taxes? Let's know about it.
Sikkim is India's only income tax-free state, offering its residents a unique financial privilege. Under Article 371(F) of the Constitution and Section 10(26AAA) of the Income Tax Act, people of this state are completely exempt from paying income tax, regardless of their earnings. This special exemption dates back to Sikkim's merger with India in 1975, when specific provisions were introduced to safeguard the rights and interests of its people. As a result, while taxpayers across the country are liable to pay income tax based on their income slabs, Sikkimese residents enjoy full exemption.
3/8 Image Source : namasteindiatrip.com
Sikkim is India's only income tax-free state, offering its residents a unique financial privilege. Under Article 371(F) of the Constitution and Section 10(26AAA) of the Income Tax Act, people of this state are completely exempt from paying income tax, regardless of their earnings. This special exemption dates back to Sikkim's merger with India in 1975, when specific provisions were introduced to safeguard the rights and interests of its people. As a result, while taxpayers across the country are liable to pay income tax based on their income slabs, Sikkimese residents enjoy full exemption.
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Any individual who has a domicile of Sikkim as of April 26, 1975 is entitled to be exempt from paying income tax. Furthermore, Sikkim residents are not required to provide PAN (Permanent Account Number) details when making investments in Indian securities and mutual funds which offers them a streamlined and simplified process for financial transactions.
4/8 Image Source : Pixabay
Any individual who has a domicile of Sikkim as of April 26, 1975 is entitled to be exempt from paying income tax. Furthermore, Sikkim residents are not required to provide PAN (Permanent Account Number) details when making investments in Indian securities and mutual funds which offers them a streamlined and simplified process for financial transactions.
The income tax exemption for Sikkimese residents is safeguarded under Article 371(F) of the Indian Constitution and Section 10(26AAA) of the Income Tax Act, 1961. These provisions grant complete immunity from income tax, ensuring that Sikkimese individuals remain exempt from taxation, irrespective of their earnings.
5/8 Image Source : Social Media
The income tax exemption for Sikkimese residents is safeguarded under Article 371(F) of the Indian Constitution and Section 10(26AAA) of the Income Tax Act, 1961. These provisions grant complete immunity from income tax, ensuring that Sikkimese individuals remain exempt from taxation, irrespective of their earnings.
All individuals officially recognised as Sikkimese under the Sikkim Subjects Regulation, 1961, are entitled to complete income tax exemption. This includes not only their regular earnings but also interest, dividends, and other income sources, making this northeastern state the only state in India where residents enjoy such extensive tax benefits.
6/8 Image Source : Freepik
All individuals officially recognised as Sikkimese under the Sikkim Subjects Regulation, 1961, are entitled to complete income tax exemption. This includes not only their regular earnings but also interest, dividends, and other income sources, making this northeastern state the only state in India where residents enjoy such extensive tax benefits.
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Unlike the rest of India, where income tax is levied on earnings that exceed a certain threshold, Sikkimese residents are completely exempt from such rules, even if their income reaches crores. While the deadline for filing Income Tax Returns (ITR) across the country is July 31, Sikkimese individuals are not bound by this obligation, as they are exempt from the mandatory filing requirement.
7/8 Image Source : Pixabay
Unlike the rest of India, where income tax is levied on earnings that exceed a certain threshold, Sikkimese residents are completely exempt from such rules, even if their income reaches crores. While the deadline for filing Income Tax Returns (ITR) across the country is July 31, Sikkimese individuals are not bound by this obligation, as they are exempt from the mandatory filing requirement.
Without the burden of income tax, residents of Sikkim benefit from higher disposable income which allows them to increase savings and investments. Subsequently, it also greatly enhances their financial well-being. This tax-free advantage not only boosts individual prosperity but also acts as a magnet for investments, fueling economic growth. As a result, Sikkim enjoys a significant competitive edge over other states in India, positioning it as an attractive destination for both personal and business investments.
8/8 Image Source : Pixabay
Without the burden of income tax, residents of Sikkim benefit from higher disposable income which allows them to increase savings and investments. Subsequently, it also greatly enhances their financial well-being. This tax-free advantage not only boosts individual prosperity but also acts as a magnet for investments, fueling economic growth. As a result, Sikkim enjoys a significant competitive edge over other states in India, positioning it as an attractive destination for both personal and business investments.
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