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IT Return for Minor's Scholarship from Coaching Institute in excess of Basic exemption limit

H (D) (50 Points)

12 December 2020

1. It is understood that Scholarship received by a student is fully exempt from tax, irrespective of whether the scholarship has been awarded by Govt or a Coaching institute. Please confirm.

2. In case, scholarship amount received by a minor student from coaching institute on basis of student's meritorious performance i.e. own talent, exceeds the basic exemption limit, does it require the minor student to file ITR through student's parents?

3. If ITR is required to be filed by minor student in above case, is it mandatory that the student's scholarship should reflect in 26AS?

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11 Replies

ayusmita (Tax consultant) (5885 Points)
Replied 12 December 2020

When a minor won scholarship by his or her own talent and skills it is not clubbing with parents
minor themselves file ITR return on their name

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rama krishnan (12239 Points)
Replied 13 December 2020

Scholarship received by student is exempted under section 10(16)

ayusmita (Tax consultant) (5885 Points)
Replied 13 December 2020

Not the scholarship that won by own talent or skills

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H (D) (50 Points)
Replied 13 December 2020

Please clarify whether the minor has to file ITR even though scholarship is a fully exempt entity but has exceeded the basic exemption limit.

rama krishnan (12239 Points)
Replied 13 December 2020

Section 10(16) of the Income Tax Act provides an exemption towards the scholarship granted to meet the cost of education.In simple terms, ‘scholarship’ means a grant, achieved on the basis of the academic or other achievement, made in order to support a student’s education.

Provisions of section 10(16) simply exempt any scholarship granted to meet the cost of education. In nut-shell, any scholarship received by the deserving students to meet the cost of education is exempted from income tax in terms of section 10(16) of the Income Tax Act.The entire amount of scholarship granted to meet the cost of education is available as an exemption. There is no upper limit prescribed under the Act.

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H (D) (50 Points)
Replied 13 December 2020

Thanks for clarification. However, my query still remains unanswered. Although the scholarship is fully exempt without any upper limit, in case its amount exceeds the basic income tax exemption limit, does the mijor need to file ITR and show therein that he received x amount as scholarship which is tax free a and that his tax liability is Nil ?

rama krishnan (12239 Points)
Replied 13 December 2020

Sorry for not clarifying your query in earlier posts. yes, ITR need to be filed in all cases wherein the gross receipts /income exceeds basic exemption limit.

ayusmita (Tax consultant) (5885 Points)
Replied 13 December 2020

I agree with rama krishna sir but if the scholarship is for education nothing else

When a child earns an income by way of work or from an activity for which he or she uses his or her special talent or knowledge or skill then they require to file ITR paying taxes from their own income . They can have their own pan and register in incometax apart from the mentioned things above in others they can clubbing with their parents

H (D) (50 Points)
Replied 13 December 2020

Thanks a lot Ramakrishnan ji. I too had the same view that ITR needs to be filed in this case as the gross receipts /income exceeds basic exemption limit.

I attempted this for my son through a tax consultant who files my ITR and they got my Minor son (who too has an independent PAN No.) registered under my PAN/ ITR filing account. However, the matter couldn't progress further, as the consultant were of the view that IT return details have to necessarily match with 26AS ( This was inferred by them based on discussion with the IT department officers). The scholarship was paid by a coaching institite directly to my minor son's A/c and had not reflected anywhere in 26AS of my son,. On my request, the institute did issue a certificate mentioning that the amount has been paid as scholarship to my son.

I am unable to address this bottleneck of 26AS further and have apprehension whether it is really mandatory to have it reflected in 26AS to get my minor son's return filed. Kindly advice.

Secondly, my son earned this scholarship in 2019-20, when he was a minor. Now he has turned major during 2020-21. Does he still have to file 2019-20 return as a minor?

Kindly advice on above two issues i.e.

(1) need for 26AS reflecting his scholarship to successfully file ITR

( 2) During current financial year 2020-21 when my son has already turned major in April 2020, does he have to still file an ITR as a minor for scholarship earned in last FY 2019-20 ?

Read more at: https://www.caclubindia.com/forum/it-return-for-minor-s-scholarship-from-coaching-institute-in-excess-of-basic-exemption-limit-565974.asp#reply

rama krishnan (12239 Points)
Replied 13 December 2020

1. amounts will be reflected in 26as, only if TDS has been deducted and since scholarships are exempted income, no TDS would've been deducted and hence the same will not be reflected in 26as. it's not mandatory that the receipts need to be reflected in 26as to file ITR. you can still file ITR even if it's not reflected in 26as.

2. yes, minor status has to be reckoned for the previous year and for the year during which ITR had been filed