Are Sikkimese Being Misused By MCX Traders For Tax Evasion?

| Updated : April 18, 2022, 3:21 pm
Updated : April 18, 2022, 3:21 pm

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GANGTOK: The high volume of trade supposedly by Sikkimese in Mumbai’s Multi Commodity Exchange (MCX) has raised serious concerns regarding the potential misuse of Sikkim’s status as a “tax heaven” state in India.

Sikkim enjoys a special status and its natives don’t need to pay any tax on incomes generated within the state.

The reports about the natives of Sikkim trading commodities worth a staggering USD 6 billion in the MCX have sent shockwaves across the states that has the lowest population in India with just over 6.58 lakhs residents.

Since Sikkim’s merger with the Indian Union in 1975, several of erstwhile Himalayan kingdom’s old laws have been retained and a special status has been granted to the state under Article 371(f) of the Constitution of India.

Similarly, in the Finance Bill of 2008, then finance minister P Chidambaram included an amendment in Section 10 of the IT Act that exempted all Sikkimese and their descendants (those who possess Sikkim subject certificate or Certification of Identification) from any tax on income generated within Sikkim.

The Securities and Exchange Board of India (SEBI) has exempted the mandatory requirement of obtaining a Permanent Account Number (PAN) card for all categories of investors residing in Sikkim.

Such relaxations for Sikkimese are feared to have been misused by money defaulters in the commodities market which brings to notice the exploitation of the innocent Sikkimese people by groups with vested interests.

Chief Minister PS Tamang recently said that a direction was issued to the State Vigilance to immediately start investigations into the alleged USD 6 billion commodities trading case.

“The moment we found out about the report, we directed the State Vigilance to immediately start an enquiry into those involved so action can be taken. All involved will be caught by any means,” CM Tamang stated.

He further informed that he had spoken with the Union Finance Ministry on the issue. He also suggested that big businesses could have manipulated innocent rural citizens into submitting their Sikkim Subjects for tax evasion purposes.

“We have requested the Central government and SEBI to provide us with all the information required and we will take action against all those involved if state government needs to be involved,” he added.

Opposition Sikkim Democratic Frant supremo Pawan Chamling lashed out at the state government on the “shocking” increase in Sikkim’s trading value (USD 6 billion in February) in the MCZ, which have an adverse impact on the tax exemption that Sikkim has been granted.

“Obviously, all is not well with Sikkim under SKM’s watch. This is another massively concerning issue that the people of Sikkim must look into critically. Just as we were warning the Sikkimese people about the SKM government selling government lands, assets, hydro power projects, and equity shares, now we are faced with national news warning us all that our Income Tax exemption granted by the Centre has been taken undue advantage of and apparently a multi-billion rupee scam is underway,” he stated.

Chamling further said, “Such multi-billion scams cannot take place outside the knowledge of the government. I have a serious suspicion that the Sikkim government is involved in the scam. I appeal to the Centre to initiate a fair investigation starting with the chief minister.”

IT exemption to Sikkimese is a sensitive topic in Sikkim. It is seen as unique identification feature for Indians of Sikkimese origin which protects the special status of Sikkim and its people within the Indian Union.

Amid concerns of vested interests misusing Sikkim’s laws to their advantage, many concerned citizens are now demanding for a thorough investigation to check the loopholes that governs this special privilege to Sikkim.

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