Now in answer to your queries : :
1. SOCIAL REASONS
Yes Sikkim is a SPECIAL STATE because it has the lowest population , lowest crime rate, among the highest levels of literacy, NO TERRORISM, NO MAOIST-NAXALITES, NO RELIEGIOUS\POLITICAL\CASTE\POLITICAL clashes or disturbances, it is one state which has the least pollution, the best EcoTourism destinations and STRIKES, GANGS, ROBBERY, VIOLENCE AGAISNT WOMEN OR EVE TEASING - such terms are nonexistent. IT is one state that never produces any problems to the UNION OF INDIA. It undoubtedly is a paradise in earth. SIKKIM IS SPECIAL . However i a not a regional fanatic and i believe that every state in India is Special in its own way and All states are vital to constitute our Mother India.
2. GEO-POLITICAL REASONS
Sikkim is a state which shares its boundaries with 3 countries - Nepal,Bhutan and most importantly CHINA !!! CHINA has always been at uneasy relations with INdia and has been infringing parts of Kashmir,Uttaranchal and AP and till recently never recognized Sikkim as a part of India. Sikkim acts as a buffer state and is internationally and geo-politically strategically placed giving India a Suberb Advantage in the DEFENCE & INTERNATIONAL POLITICAL PERSPECTIVE specially against China. Indian Army has vital strategic posts and outposts in Sikkim which would be absolutely beneficial and crucial in the event of war against China (hopefully never) Hence the GEO-POLITICAL importance of Sikkim as a state cannot be undermined.
3. DIFFICUTIES FACED BY PEOPLE
Sikkim due to it geographical features and tough terrian has remained industrially and educationally abckward as cmoounication and transport is difficult in this state due to the terrain in addition to lack of an Airport and Railway network within the state. This coupled with other natural reasons has left this state backward. Also a number of backward and tribal communities reside in the state who deserve good opportunities. My firend, EXEMPTIONS,ALLOWANCES AND DEDUCITIONS in Income tax is not given randomly or discriminatiorily but with due consideration by experts and in order to promote development and social upliftment in various fields and backward areas. Thus the entire NORTH EAST AND JAMMU & KASHMIR have a lot of exemptions and benefits not just Sikkim.
4.HISTORICAL REASONS
For your info prior to 16 may 1975 Sikkim was NOT A PART OF INDIA but a INDEPENDENT KINGDOM. In accordance with a treaty signed in 1950 it was an associate of India and provided support to India as well as allwed Indian Army to set its base in Sikkim to fight against Chinese in the INDO-CHINA WAR 1962. The INdo CHina war exposed the vulneralibility of India and highlighted the importance of Sikkim. The Indian Govt. realised the importance of assuming control over this Kingdom and after a chain of events and public demand for abolition of monarchy, a treaty was signed in 1973 and finally in 1975 Sikkim was merged into the Indian Union.
5. Merger of their independent Kingdom into Indian Union was accepted althoght with pain by the Sikkimese Subjects as loss of Identity as subjects of a INdependent Country is always painful (We Indians know it very well as we were also once under the British) however they accepted it amicably and since them have co-operated with the INdian Union and have accepted themselves as INDIANS first and Sikkimese later. Thus in order to provide due respect to the sacrifice of their Independent Country and merger with INdia , ARTICLE 371F of the INdian constitution was inserted preserving the OLD LAWS (Sikkim Income Tax Manual 1948,Sikkim Companies Registration Act 1961 etc ) and Sikkim Subjects were promised their identity.
6.However recently Income Tax Act was extended into SIkkim causing much outrage as the Sikkim Subjects felt cheated and had a perception that 371F was being diluted , however the Indian Govt by inserting 10(26AAA) clarified its stand in this issue.
7.It may also be noted that this exemption is only upto a specific period (i heard it is 2017 but i am yet to verify it) and it is only for SIKKIM SUBJECT HOLDERS (issued Sikkim Subject Certificate by The Chogyal -The then King of Sikkim) There are a lot of business communities who have been settled in sikkim since generations but are not exempt u\s 10(26AAA) as it applies only to holders of Sikkim Subject.This is a different issue and the contorversy is yet going on over the taxation of such left out sections of Sikkimese Society.\
I despite being a Sikkimese by birth and being settled in Sikkim since generations but am not a Sikkimese as per Sec 10(26AAA) and have to pay taxes in Sikkim.However i still support the section 10(26AAA) giving exemption to Sikkim Subjects and also support the demand of its extention to the "left out business communities".
I hope i have provided enough reasons , not only Legal REasons to quell your outburst and do remember that in income tax is not always financial prudence that is considered but also socio-economic ,historic and strategic reasons while making the laws.
With due Regard and Queries or Arguments if any are welcome.
CA YASH MARDA
CAclubindia
