SAJIT S NAIR (INDUSTRIAL TRAINEE) (144 Points)
23 June 2011Is the stipend received at the time of Industrial Training liable to TDS u/s 194C? As I am working as Industrial Trainee, the company is deducting TDS @ 1% saying there is no specific exemption to not deduct TDS for stipend.And so non deduction will disallow their expenditure.
Abhay
(Finance)
(43 Points)
Replied 23 June 2011
I think the stipend received at the time of Industrial Training is received after deduction when annual margin falls liable to TDS u/s 194C, in other cases, NO.
SAJIT S NAIR
(INDUSTRIAL TRAINEE)
(144 Points)
Replied 24 June 2011
Then what about this case law and decision. Please find the attached file.
Abhay
(Finance)
(43 Points)
Replied 24 June 2011
It is very simple if you apply the thought behind the basic taxability given in the law
(Act, 1961)
1. The reason for exemption was that the stipend was paid to meet the cost of books,
coaching fees, examination fees and so on. Simply say, in respect of the scholarships
granted to meet the cost of education.
2. Don't you agree, The sum received by way of stipend is a revenue receipt and so
chargeable to tax?
Under which head would it be taxable?
the answer lies in whether in the case of article training or industrial training, a
employer-employee relationship is created. In articleship, it is not but under industrial training, a very obvious, Yes.
3. In short, there is no specific exemption available for training allowance or stipend. It
would be taxable under the head "Salaries". Unless, you prove point (1) above.
SAJIT S NAIR
(INDUSTRIAL TRAINEE)
(144 Points)
Replied 24 June 2011
But, I have heard companies at Bangalore and chennai payin Rs.15 to 2kk per month and not deducting TDS .
Abhay
(Finance)
(43 Points)
Replied 24 June 2011
If his/her employment is as a consultant then his/her income would come under profits from business or profession. In this category, certain expenses incurred for the purpose of the profession can be deducted from the total income and if the balance is more than the basic exemption , then only he/she will have to pay tax.
CA Nitin Wadhwani
(Chartered Accountant)
(4469 Points)
Replied 24 June 2011
Stipend is taxable under Income from Salaries and tax is deductible u/s 192.
However, some enterprises deduct tax under 194J also.
Live Course on Python for Financial Analysis: Unlocking Efficiency in Accounting and Finance
CAclubindia
