hey guys can u tell me .....
is stipend received is taxable as per IT act...........?????????????
28 Replies
Sujith
(Chartered Accountant)
(83 Points)
Replied 17 October 2009
This is actually a very good question raised in CAClubindia. I actually dont believe it is not taxable because it is too less...... What if, an article who is working in any of the BIG 4 Accounting firm earning more the non taxable slab....... Hmm Tell me....
I feel stipend is not taxable as it cannot be charged to tax anywhere under the Income Tax Act. Because, there is no employer-employee relationship in place... It is more of a teacher-student relationship. Stipend is paid to cover the cost incurred getting yourself trained. Not to make profits in lieu of it. Of course, BIG 4s do pay huge stipend. But still you cant ignore the fact of absence of employer-employee relationship.
Apart from that, according to what I have remembered(Tch, tch... My memory is too weak, so better corroborate this point with someone) there is a case law, a judgement given by some high court saying that stipend should not be taxed. I cant confirm on this. So better take some homework and the get the citation and post it here......
Ankit 21 CA,CS,B.Com
(CA)
(3949 Points)
Replied 17 October 2009
Attached File : 54 articleship stipend 10 16 exemption case law.pdf downloaded: 767 times
CA.kaya
(Chartered accountant)
(3990 Points)
Replied 17 October 2009
it is an exempted income u/s "10(16) scholarships granted to meet the cost of education"
Shubham
(Student)
(46 Points)
Replied 17 October 2009
hey dat was an incredibly good question and has been equally well answered by bvm jaipur. that article was really a masterpiece
Vignesh S
(Article)
(67 Points)
Replied 18 October 2009
My Dear Fellow Aspiring CharteredAccountants,
First of all a very Happy Diwali To all of You.
Stipend earned by the Articled Assistant is Taxable in his hands.
While Computing the Gross Taxable Income the income earned by way of stipend is included under the head " Income from Salaries".This is because the relationship between the Principal and the Articled Assistant is that of an employer-employee. ( The article being a contractual employee). If the article alongwith his stipend income also earns income from some other sources his gross income will be computed taking into consideration his stipend as well that other income.
The stipend earned was once exempt under section 10(16) of the Act.However the same was subsequently scrapped.Even though other scholarships earned continues to be exempted u/s 10(16) income by way of stipend is taxable.
anoop
(MBA (Finance), CA-PCC)
(93 Points)
Replied 19 October 2009
hey guys..........
vignesh is telling it is taxable .........
while others are telling it is exempted......
who is right ?????????
???????????????
Rakesh kumar yadav
(CA,CS,M.com.CMA)
(31 Points)
Replied 19 October 2009
hi i agree with the view of vignesh s. stipen is taxable in the hand of student.
CA.kaya
(Chartered accountant)
(3990 Points)
Replied 19 October 2009
i think, relationship of article trainee and C A member is not " employer ,employee " . its" trainee & principal" relationship... if you have any notification saying its " employer ,employee " relation , then please share the same.
i think its "trainee & principal" relation because in P F act , bonus act , article trainee's are excluded from calculation of employees...
Gaurang Desai
(CA FINAL & CS Inter Student)
(123 Points)
Replied 21 October 2009
mr .anoop
yes stipend is taxable under income from salaries, but see currentlimit of stipend is minimum rs.1500 pm. hence your yeraly salary is rs18000/- but in metro city like mumbai,delhi, some of the CA firm are pay article assistant the amount which equal to some another employee(including perks like Bonus) hence there stipend cross minimum exemption limit & they r taxed under income from salaries
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