Tax ability of stipend

Page no : 2

Nikunj (CA) (54 Points)
Replied 01 August 2011

stipend received is not taxable under salary bcoz no empoyer employee relationship exist,

stipend is exmpt under 10(16),if your stipend amount is high than its safer side to deduct TDS

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Ashok J (CA Final) (880 Points)
Replied 01 August 2011

Stipend received by CA student is exempt from tax. It is not under IT Act. Its based on Case law - ACIT vs Ratnakar where it was held that stipend received by CA student is exempt from tax. This case law is available in google.

CA Gautam Sharma (Chartered Accountant) (41 Points)
Replied 01 August 2011

The view that stipend is not taxable is taken in the light of Section 10(16), under which, scholarships granted to meet the cost of education is exempt. In this connection it may be noted that the Income Tax Appellate Tribunal, 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).

It is felt that the ratio of these decisions will apply to the stipend received by you for pursuing a super-speciality course in urology.

mangesh ramdas pawar (ARTICLE) (24 Points)
Replied 02 August 2011

it is exempt u/s 10(16), stipend received is not as salary, but it treat as scolarship, & hence it is exempt u/s 10(16)

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 02 August 2011

See this link where it has been discussed in length and hence is taxable /forum/details.asp?mod_id=90486

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Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 02 August 2011

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). Stipend is taxable as the case law mentioned is not relevant anymore. So please reply taking into account the facts of the old case which are distinguishable currently.