The assault of an activist in Sikkim’s Singtam town on April 9 has once again drawn attention to the concerns over the redefinition of who counts as “Sikkimese” for tax purposes in the Finance Act, 2023.

Critics allege that the law, which was passed by the Lok Sabha on March 24, is an attack on the state’s special rights and the identity of native groups.

Keshav Sapkota, the man who was assaulted, is the general secretary of the Joint Action Council that is leading the protests against the legislation. Violence followed Sapkota’s assault and prohibitory orders were imposed in Singtam.

The act allows Indians who settled in Sikkim before 1975, when the Himalayan kingdom was merged with India, to avail of tax exemptions that ethnic Sikkimese groups have been granted. The bill was necessitated by a Supreme Court verdict in January which held that “old settlers” cannot be denied tax exemptions that the Sikkimese can claim.

Opposition parties and activists have alleged that the Finance Act has diluted the Sikkimese identity and violates Article 371F, a constitutional provision that gives the state special rights.

The ruling Sikkim Krantikari Morcha said that the amendments redefined “Sikkimese” only for income tax purposes and did not affect Article 371F. But activists and Opposition leaders have expressed concern that this may eventually have other consequences, such as allowing Indians domiciled in the Himalayan state to buy land.

Opposition parties such as the Sikkim Democratic Front and the Hamro Sikkim Party are supporting the protest by the Joint Action Council, an umbrella group of civil society organisations representing Sikkim’s ethnic communities.

The Opposition has alleged that Sapkota’s assailants are linked to the ruling Sikkim Krantikari Morcha party.

Joint Action Committee general secretary Keshav Sapkota was injured in the attack. Credit: @KarmaPaljor/Twitter
Joint Action Committee general secretary Keshav Sapkota was injured in the attack. Credit: @KarmaPaljor/Twitter

The tax exemption was introduced in 2008 and applied to ethnic Sikkimese groups such as Bhutias and Lepchas who were Sikkim nationals before 1975. Indian nationals who had settled in Sikkim before 1975 did not enjoy the tax exemption on income arising from Sikkim and on dividends or interest from securities.

This was challenged by the Association of Old Settlers of Sikkim, consisting largely of members of trader communities such as Marwaris. They argued that excluding them from this exemption was discriminatory.

When the Supreme Court allowed old settlers to also avail of the exemption, it effectively redefined who was Sikkimese with regard to tax returns. To reflect this Supreme Court judgement, the Finance Act amended the Income Tax Act, 1961.

Protests erupted against the Supreme Court judgement in January and February but they were centred on the court’s observation that members of the Sikkimese Nepalese community were of “foreign origin”. Subsequently, in February, following a review petition filed by the Union home ministry, the court ordered the phrase “people of foreign origin” with reference to the Sikkimese Nepalese community to be removed from its judgement.

Sikkim’s Opposition parties alleged that the ruling Sikkim Krantikari Morcha and its ally, the Bharatiya Janata Party, were responsible for the Supreme Court’s remarks that Sikkimese Nepalese people were of foreign origin. “It is due to the double-engine government of SKM and BJP that we have been branded as immigrants,” Hamro Sikkim Party leader Bhaichung Bhutia claimed in February.

Sikkimese Nepalese constitute 75% of the state’s population. The Lepchas and Bhutias constitute around 23% of the state’s population, while the old settlers form around 2%.

Now, with just a year before elections to Sikkim’s Assembly and the Lok Sabha, the focus has shifted to the Finance Act. The Opposition parties and activists have claimed that the Finance Act violates Article 371F, a special constitutional provision that allows Sikkim to protect its old rules.

Under Article 371F, only the descendants of Sikkim’s subjects whose names were mentioned in a 1961 register– those who lived in the state before the kingdom’s merger with India – are considered Sikkimese. This gives them rights to land ownership and to seek state government jobs.

“Earlier, ‘Sikkimese’ meant the subjects of the king and their descendants,” Joint Action Council member Amrit Sharma told Scroll. “Now, if that definition is being given to others, then who are we? What has happened is a very scary dilution” of Article 371, he said.

On Sunday, former chief minister and Sikkim Democratic Front leader Pawan Kumar Chamling criticised the ruling Sikkim Krantikari Morcha. Chamling claimed that the people of Sikkim had been betrayed because the special provisions promised to them had been taken away. “The Financial Bill, 2023 redefines ‘Sikkimese’ as any Indian citizen domiciled in Sikkim, extending to them the same benefits as that of the original inhabitants whose forefathers’ names were in the 1961 register,” Chamling told PTI.

Hamro Sikkim Party's Bhaichung Bhutia (left) and Congress leader Ranajit Mukherjee. Credit: @RanajitSpeaks/Twitter
Hamro Sikkim Party's Bhaichung Bhutia (left) and Congress leader Ranajit Mukherjee. Credit: @RanajitSpeaks/Twitter

While Chamling on Wednesday blamed the ruling Sikkim Krantikari Morcha for the alleged dilution of the legal provision, the Congress criticised the Sikkim Krantikari Morcha’s ally, the BJP.

Gopal Chettri, the party’s Sikkim unit chief, said on April 1 that it was an “attack” on Article 371F. “...We feel that it is a move by the BJP government to fulfil its agenda of ‘One Nation, One Constitution’ by gradually diluting Article 371F,” said Chettri.

However, the ruling Sikkim Krantikari Morcha said that the rights of the ethnic Sikkimese have not been compromised.

On Monday, Chief Minister Prem Singh Tamang, who is also known as PS Golay, said that Union Finance Minister Nirmala Sitharaman had assured him that the expansion of the definition of “Sikkimese” through the Finance Act was only related to extending the income tax exemption to the old settlers – implying that Article 371F remains untouched.

Tamang also told the Legislative Assembly that there was no cause of concern. “Prime Minister Narendra Modi says 371F is a protective shield which no one can touch,” he added.

The BJP’s state unit chief Dilip Jaiswal also sought to assuage concerns by suggesting that Article 371F remains fully protected. But two of the party’s state leaders, SB Karki and Laten Sherpa, resigned to protest its alleged dilution.

Activists and the Opposition are not convinced by the state government’s assurances.

Hamro Sikkim Party leader Bhaichung Bhutia told The Times of India that the redefinition may lead to demands for other benefits to be extended to the old settlers. “Today, it’s income tax, tomorrow it can easily be about jobs and education,” Bhutia said.

Sharma concurred. “This sets a precedent for other things to be brought in later,” he said. “This opens Pandora’s box.”

In a similar vein, Chamling, who served as Sikkim’s chief minister for 24 years until 2019, expressed concern that the state will soon be overwhelmed by “settlers”. “Over the next few years, the doors have been opened for more outsiders to come to Sikkim and enjoy the exclusive rights,” Chamling alleged.

Also read: Explainer: Why a Supreme Court verdict has sparked statewide protests in Sikkim