THE OLD SETTLERS OF SIKKIM

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GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
RAJYA SABHA
UNSTARRED QUESTION NO 2251
TO BE ANSWERED ON 22.03.2005
EXEMPTION OF CITIZENS OF SIKKIM FROM INCOME TAX

2251.	SHRI PYARELAL KHANDELWAL

Will the Minister of FINANCE be pleased to state:- 


(a) whether it is a fact that at the -time of merger of Sikkim with India in 1975 it was committed that citizens of Sikkim would be exempted from income tax and direct taxes;

(b) if so, whether Government are considering to impose income tax and other taxes oil the citizens of Sikkim against the said commitments;

(c) whether Government have received any memorandum from the State Government of Sikkim,

(d) if so, whether Government are considering the same, and

(e) the details of the memorandum received from Sikkim? 


ANSWER

MINISTER OF STATE IN THE MINISTRY OF F!N?,NCE:

(SHRI S.S. PALANIMANICKAM)

(a) & (b): Article 371F was inserted in the Constitution of India by the Constitution (36~ Amendment) Act, 1975, with effect from 26.04.1975, introducing special provision with regard to the State of Sikkim. The Article, inter alia, provides that notwithstanding anything in the Constitution of India, all laws in force immediately before the appointed day in the territories comprised in the State of Sikkim shall continue to be in force until amended of repealed. However, Clause (n) of the said Article provides that the President may, by public notification, extend with such restrictions or modifications as he thinks fit to the State of Sikkim any enactment which is in force in a State of India at the date of the notification. Pursuant to the above Constitutional amendment, the Ministry of Home Affairs issued a notification number S.O. 1028(E) dated 7h November, 1988, whereby direct tax laws of India including the Income-tax Act, 1961, the Gift Tax Act, 1958 anti the Wealth Tax Act, 1957 were extended to the State of Sikkim with effect from essessment year 1989-90. Further, through the Finance Act, 1989, the effective date of implementation of the direct tax laws to Sikkim was extended to assessment year 1990-91.

(c), (d) & (e): A Memorandum was submitted by the Chief Minister of Sikkim on 17.06.2004 requesting, inter alia, expeditious resolution of the impasse on the issues relating to the extension of direct tax laws to the State of Sikkim A high-power committee has been set up to resolve the issue. The Committee consists of the representatives of the State of Sikkim as well as the Government of India. The recommendations of the Committee are under formulation, with the last sitting having taken place on 4th March, 2005.