If the amount of stipend goes beyond the basic exemption limit then whether stipend will be taxable?
26 Replies
CA. Dashrath Maheshwari
(TaXpert)
(15103 Points)
Replied 24 September 2010
OH ! SAME QUERY AGAIN....
ANSWER: THERE IS NO SPECIFIC EXEMPTION GIVEN TO THE STIPEND GIVEN TO CA STUDENTS SO ITS CLEAR THAT ITS TAXABLE.
Karan Thacker
(CA)
(117 Points)
Replied 24 September 2010
Stipend, prima facie, should be treated as a scholarship and should be exempt,
since Sec. 10(16) exempts all ``scholarships granted to meet the cost of
education''. In CIT v V. K. Balachandran (1984) 147 ITR 4 (Mad), the amount
received as grant-in-aid and other fringe benefits from a foreign university,
though in the nature of salary, was found to be still exempt under Sec.
10(16). A similar medical scholarship from a foreign university during
training programmes was held to be exempt under Sec. 10(16) in A. Ratnakar Rao
v Addl. CIT (1981) 128 ITR 527 (Kar) and Dr. V. Mahadev v CIT (1990) 184 ITR
533 (Mad). In the latter case, it was held that since scholarship is exempt,
even if there be any savings therefrom, it need not be taxable. The Board has
clarified from time to time that various scholarships under different schemes
as research fellowships granted by the Government are not taxable, but such
clarifications are not necessary for every scholarship.
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 24 September 2010
All receipts are taxable unless exempt expressly under the I T Act. Stipend is not expressly exempt under the Act. Thus Stipend is certainly taxable income, if it is purely being given in form of cost of living or as wages or salary or for any purpose but studies.However, if the Stipend granted is for furthering education or gaining knowledge , same can be claimed exempt u/s 10[16] of the I T act . In this regard the decision of the Karnataka High Court in A. Ratnakar v. Addl. CIT [1981] 128 ITR 527 can be applied.This was also followed by Tribunal in case of Income-tax Officer v. Dr. G.N. Ramachandran [1 ITD 902
Aditya Maheshwari
(CA in Practice)
(35867 Points)
Replied 24 September 2010
Joey Tribbiani
(fdg)
(2010 Points)
Replied 24 September 2010
CA article ko itna stipend milta hai ki taxable ho??? Atleast muje to nhi. Ha agar 3 saal ka milaya jaye to 10 saal pehle k slab rate k hisab se Taxable hoga @ 10%
On a serious note:
in Sudhir Kumar Sharma vs ITO (1983 15 Taxman 100 Jaipur Mag) has held that the stipend received by an articled clerk from a chartered accountant is exempt under Section 10(16).
The reason given by the Bench was that the stipend was paid to meet the cost of books, coaching fees, examination fees, and so on.
Reference may also be made to the ITAT decision in ITO vs Dr. G. N. Ramachandran (1 ITD 902 Bangalore) where it held that stipend received to meet the cost of education would be exempt under Section 10(16).
Mohammed Shariq
(Chartered Accountant)
(51 Points)
Replied 24 September 2010
if the refrence above given by named A STUDENT is correct then i agree with him otherwise stipend is taxaxble and again i would like to know kisko itna stipend milta hai ki it has cross the basic exemption limit.
Sarvesh Kumar Singh
(Student CA Final (Articled Asst.))
(170 Points)
Replied 24 September 2010
Stipend received by a ca student is declared fully exempt by the honorable supreme court of india.
Joey Tribbiani
(fdg)
(2010 Points)
Replied 24 September 2010
| Originally posted by : Mohammed Shariq | ||
 |
if the refrence above given by named A STUDENT is correct then i agree with him otherwise stipend is taxaxble and again i would like to know kisko itna stipend milta hai ki it has cross the basic exemption limit. |
 |
SK sharma case can be verified frm here
https://www.thehindubusinessline.com/iw/2003/12/14/stories/2003121400091200.htm
in last section "reply" 2nd para
RAVINDER SINGH
( IPCC STUDENT)
(116 Points)
Replied 25 September 2010
I agree with Aditya sir.
The case law is of Sudhir Kumar Sharma (1983) 15 Taxmann 100 of ITAT Jaipur Bench which states that stipend received by CA student is exempt.
In the case law there is mention that the same is applicable before introduction of rule 32B prescribing the minimum stipend rules was prescribed by the Institute which do not follow the follow the practice of paying a meager amount to meet the cost of books, fees, etc and hence cannot be termed as receipt for the purpose of meeting the cost of education to be exempt u/s 10(16).
IT IS TAXABLE.
(Guest)
Stop all discussion and have a look on attached file.
Attached File : 17 54 articleship stipend 10 16 exemption case law.pdf downloaded: 574 times
@*CS Siddharth Bumb. *
(B.Com, CA Final, CS )
(5270 Points)
Replied 25 September 2010
i think it is exempt..........
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