Gauhati High Court, income tax, Income Tax Act 1961, indigenous tribal, Meghalaya Cooperative Apex Bank, municipal area in Shillong, RT Rymbai, Scheduled areas, Section 10 (26), Supreme Court judgment
As per the practice, if not law, no indigenous tribal living or serving in any part of Meghalaya have to pay income tax. They are said to be exempted under the section 10 (26) of the Income Tax Act 1961. However, the clause attracted dispute with many litigations between citizens and Income Tax department, some even reaching up to the Supreme Court. An apex court verdict passed in the 70s’ is all set to haunt the department, which has all these years failed to act on it, especially in Meghalaya. The verdict pronounced in 1976 overturned a Gauhati High Court judgment in favour of one RT Rymbai exempting him from paying income tax.
The can of worms was opened in a case between the Meghalaya Cooperative Apex Bank (MCAB) and the IT department, which failed to return the tax deducted “illegally” from the bank. Although the Supreme Court judgment provided arms for the IT department and its legal counsels to pursue its case of imposing income tax on tribals living in non-Scheduled areas, they have all along been ignoring the apex court order allegedly in order to cater to the sentiment of local public, a source pointed out. The revelation about the Supreme Court judgment led to the recent order by Meghalaya High Court asking the IT department to find out under what law the tribals living in municipal areas are exempted from paying income tax.
As per the clause 26 of Section 10, which lists “incomes not included in total income”, a person is exempted from paying income tax provided – a) if he or she isa member of a Scheduled Tribe, b) resides in the Scheduled area and the c) income concerned generated from any source in the Scheduled areas or by way of dividend or interest on securities. In RT Rymbai’s case, the Gauhati High Court termed the Section 10 (26) “discriminatory” since there are municipal areas inside Shillong which do not come under jurisdiction of the Sixth Schedule. However, the Supreme Court struck down the high court verdict, effectively meaning the tribals staying in non-Scheduled areas, even if within the same state, have to pay the income tax.
The Section 10 (26), if implemented in letter and spirit, would compel a person to pay income tax while serving in a government office located in a municipal area in Shillong and would be exempted if he is transferred to another branch of the office a few kilometers away within the city! The matter has already stirred a hot debate and everybody is looking up to the high court if any landmark judgment would pave the way for revenue generation at least from the “no-more-weaker” tribal people.
(Published as editorial in The Meghalaya Guardian on July 3, 2015)