1.Students are paid stipends for pursuing certain academic courses. When it self exceeds individual's taxable limit of income, whether itr to e filed?
& Whether it is to be subjected to TDS?
11 Replies
Prashant Jha
(21 Points)
Replied 24 November 2020
IT Act, 1961 does not mention stipend. As per Section 10(16), scholarship is exempt from taxation.
However, as long as the purpose of paying stipend is educational, it is not taxable. In case of medical practitioners practising in hospitals and graduates receiving income to learn services just like other employees, it will be considered as salary and taxed accordingly.
If employer has given Form 16, then also it becomes a salary is not a stipend anymore. If Form 16 is not given and stipend is taxable, it will be taxed under income from other sources.
ITR filing is necessary if stipend income exceeds 250000.
However, as long as the purpose of paying stipend is educational, it is not taxable. In case of medical practitioners practising in hospitals and graduates receiving income to learn services just like other employees, it will be considered as salary and taxed accordingly.
If employer has given Form 16, then also it becomes a salary is not a stipend anymore. If Form 16 is not given and stipend is taxable, it will be taxed under income from other sources.
ITR filing is necessary if stipend income exceeds 250000.
veerendar singh
(tax consultant)
(3301 Points)
Replied 26 November 2020
Mr prashan can you quote the section under which you claim stipend for educational purpose as non-taxable.
Prashant Jha
(21 Points)
Replied 26 November 2020
The Act does not mention the word "stipend" anywhere in the body. The closest we get is scholarship in 10(16). Therefore, the purpose of paying stipend should be taken into account. If it is purely for academic purposes, then it counts as a scholarship and is not taxable.
veerendar singh
(tax consultant)
(3301 Points)
Replied 27 November 2020
You are getting confused between stipend and scholarship. by no stretch of imagination can stipend be equated with scholarship.
one must firstly try to understand the nature and objectives behind the intership agreement. ordinarily its that students seek to get a practical exposure under a professional. for the student this becomes a calling for the specified period and he is also paid some meagre amount as he performs some activities for the organisation. hence there is a bilateral consideration. Alternatively if stipend is said to be received without any consideration then provisions of s. 56(2) has to be called for. By no means stipend can be said to be scholarship.
one must firstly try to understand the nature and objectives behind the intership agreement. ordinarily its that students seek to get a practical exposure under a professional. for the student this becomes a calling for the specified period and he is also paid some meagre amount as he performs some activities for the organisation. hence there is a bilateral consideration. Alternatively if stipend is said to be received without any consideration then provisions of s. 56(2) has to be called for. By no means stipend can be said to be scholarship.
Prashant Jha
(21 Points)
Replied 27 November 2020
I am not getting confused. What you said I have mentioned. If taxable, it will be taxed as income from other sources like in case of graduates in internship or practising doctors if Form 16 is not provided. However, research grants or payment for experience at a place where you will not be ordinarily and exclusively working or residing will not be taxable as stated in 56(24)(iiia) and 56(24)(iiib).
veerendar singh
(tax consultant)
(3301 Points)
Replied 27 November 2020
Not only you are confused, you are fuddled too. you have quoted some dehors impenetrable sections which do not exist in the act. prashant you need to understand that it is purely commercial transaction when one is paid for getting experince at a place. since one is not qualified, he is only paid meager amount to meet basic expenses like commuting. its just like an underqualified person employed at half salaray for some years before bringing him on roll at full fledged salary.
Prashant Jha
(21 Points)
Replied 27 November 2020
My mistake. I meant of Section 2. However, what I have stated is same as you. I agree. It is just that reserch grants are actually treated as scholarship and not stipend.
veerendar singh
(tax consultant)
(3301 Points)
Replied 27 November 2020
So its proved that you got confused. the querist had specifically asked for stipend. research grants is completely different thing. i appreciate your knowledge and application about 10(16).
Prashant Jha
(21 Points)
Replied 27 November 2020
Stipend does not need necessarily to have such a narrow definition.
veerendar singh
(tax consultant)
(3301 Points)
Replied 27 November 2020
Research grant is normally given for independent or solitary research. if you are doing your research under a professor or a scholar or a scientist then what you receive from your mentor or guide is for the purpose of meeting your commuting or clothing or such basic needs in exchange of the assistance and menial work that you offer to him. stipend is most commonly given in industries.
further, in case of grants it also depends on the person who pays the grant. if a company is paying you a lumpsum amount to aid your research the outcome of which is going to be beneficial for the company's project, then in that case its a transaction out of scope of s.10.
further, in case of grants it also depends on the person who pays the grant. if a company is paying you a lumpsum amount to aid your research the outcome of which is going to be beneficial for the company's project, then in that case its a transaction out of scope of s.10.
ayusmita
(Tax consultant)
(5885 Points)
Replied 28 November 2020
As per the income tax act stipend is a scholarship given to meet the education expenses and for that it Is expemted from incometax under section 10 sub section 16
how ever If you get stipend in medical term for medical training , or particitioner or you say a MBA or engineering student get during there training period it's become taxable but when comes to education field it's exempted
stipend has different treatment as per the work of place considerating it's nature of work
again if it exceeds the taxable limit then it's mandatory to file incometax return but you cannot consider any expenses however you can get Deduction as per 80C
subject to TDS depends upon the employer where's you working or company
sometimes they did it sometimes they don't as per their rules and regulations
if you get stipend as per salary means where the employer provide you form 16 then it's comes under salary otherwise it's always comes under income from other sources
how ever If you get stipend in medical term for medical training , or particitioner or you say a MBA or engineering student get during there training period it's become taxable but when comes to education field it's exempted
stipend has different treatment as per the work of place considerating it's nature of work
again if it exceeds the taxable limit then it's mandatory to file incometax return but you cannot consider any expenses however you can get Deduction as per 80C
subject to TDS depends upon the employer where's you working or company
sometimes they did it sometimes they don't as per their rules and regulations
if you get stipend as per salary means where the employer provide you form 16 then it's comes under salary otherwise it's always comes under income from other sources
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