Northeaster Indian state Sikkim is the tax free state in the country.
Sikkim residents are exempted from paying taxes due to section 10 (26AAA) of the Income Tax Act of 1961.
Article 371 A of the Indian Constitution grants special status to all the Northeastern states.
The Supreme Court ruled on January 13, 2023, that all Sikkimese citizens should be eligible for the tax exemption advantage stipulated in section 10 (26AAA).
95 percent of the population was exempt from paying taxes after the Supreme Court gave Indian citizens who had lived in Sikkim up until April 26, 1975.
By offering tax exemptions, Section 10 (26AAA) seeks to lessen the burden on taxpayers. This section has concentrated on calculating a "exempted income," or revenue that is not included in computations of total income.