Former Chief Minister and the President of the SDF party Pawan Chamling has warned that the shocking increase of Sikkim traders’ market share on the Multi Commodity Exchange to 5.5 percent may have an adverse impact on the tax exemption that Sikkim has been granted. This reminds the state of the gift racket of the 1980s which had led to the extension of income tax into Sikkim by the centre. The SDF government lobbied with the centre for over 13 years before securing the IT exemption in 2008. The SKM government has been recklessly and foolishly selling Sikkimese properties, assists and privileges one by one. He wants to know what is the SKM government doing while such illegal transactions are going on Sikkim.
“Q. Sikkim has been in the national news for another wrong reason – namely the unprecedented growth in Sikkim’s share in the multi commodity exchange (MCX). Several news reports speculate that traders in other states may be using Sikkim based residents as a proxy to carry out trade as Sikkim enjoys a tax exemption. Many are warning that it may lead to the lifting of the tax exemption granted to the Sikkimese people.
Ans: We received many warnings about the dangerously changing scenario in Sikkim. 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 Sikkim government lands, assets, hydel 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.
For our readers, let me quickly run you through what is happening.
The Multi Commodity Exchange (MCX) is India’s largest commodity derivatives exchange which was established in 2003 under the ownership of the Ministry of Finance, Government of India. The MCX facilitates online trading of derivatives transactions.
In a shocking revelation, it was found out that the market share of Sikkim-based traders on the Multi Commodity Exchange (MCX) increased to 5.5 % when it had been zero just a few years ago. Out of the total volume churn of over $110 billion witnessed by the MCX, Sikkim’s share was $6 billion. There were only 674 traders from Sikkim, based on unique client codes, a figure which has now increased to 2,217. This is a 400% increase in the number of traders which is highly alarming. What is highly mysterious is that other densely populated states are witnessing a smaller volume even though they have a larger number of traders. For example, Bihar has 2.88 lakh traders but accounts for only 1.51 % of the trading volume. Kerala and Madhya Pradesh have 2.04 lakh and 4.67 lakh traders but account for just 1.45 and 3.2 % of the volume respectively. Many small and NE states have a zero to less than 1 percent share.
What could be the reason behind such an abnormal and unbelievable increase in Sikkim’s share? Experts across the country are saying that traders from outside the state are using Sikkim-based residents as proxy to carry out these trades. This is because residents of Sikkim are exempted from the mandatory requirement of a Permanent Account Number (PAN) which allows them to skip filing tax returns. There is no doubt that traders are taking undue advantage of Sikkim’s tax exemption to mint billions of rupees.
I would like to make the following significant comments.
What is the SKM government doing while all these illegal, anti-national and anti-Sikkim activities are going on? 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.
This unfortunate scam reminds us of another massive scam that had taken place in Sikkim in the 1980s under the Sikkim Sangram Parishad governance which came to be known as the Gift Racket. Crores of rupees were apparently laundered in Sikkim in the name of gifts. Local players were sending cash to non-Sikkimese “friends” as gifts. It was basically the recipients’ black money which they gave to Sikkimese players, asking them to send it back to them as gifts. They used this cleverly devised method to convert their black money into white money. The gifting partners from Sikkim were given a commission of up to 15 percent for their service. India Today had reported, “As some of the biggest names in and out of Sikkim – including film stars, well-known industrialists and a local minister’s wife – figured in the deals, the issue threatened to break into a major scandal.” The report further said, “… state government officials and politicians have condoned or actively been involved in the laundering of money. Most of the businessmen on the list are supporters of the Sikkim Sangram Parishad”.
The unfortunate consequence of the racket was the extension of the Income Tax Act (1961) to Sikkim. India Today reported, “The happy honeymoon, however, may be coming to an end. The Union Government has finally decided to crack down on the flourishing “black-into-white” racket by extending the Income Tax Act (1961), Wealth Tax Act (1957) and Gift Tax Act (1958) to Sikkim. Sikkim, under its special dispensation after its merger with India in 1975, has no laws governing wealth tax or gift tax and even the income tax paid by its citizens is ridiculously low.”
History is all set to repeat for Sikkim. Let the Sikkimese people remember that the Sikkim Democratic Front government lobbied for 13 long years since 1994 and convinced the Centre to grant an Income Tax Exemption to the people of Sikkim. It was a huge feat for our government. The income Tax Exemption for Sikkim not only has economic advantages. It also cements our pre-merger distinct Sikkimese identity in the Republic of India. Sikkim is the only state that enjoys this special status under the constitutional provision.
I strictly warn the state government to come out clean on this immediately, before it is too late. This weak government has no right to sell our Sikkimese identity to its cronies. Sikkim is not the hunting ground for a team of greedy businesspeople and cheap politicians. It is the land of the Sikkimese people. It is our pride. It is everything to us. Let them know it and render due respect.”
Secy., Press and Publicity Affairs,