Hi,
I want to know that whether stipend received by doctors are taxable or not taxable??
CA Dimple Bakshi (Chartered Accountant) (24 Points)
12 February 2017Hi,
I want to know that whether stipend received by doctors are taxable or not taxable??
Sanjay S
(Chartered Accountant)
(1375 Points)
Replied 12 February 2017
'Whether to tax stipend income in hands of doctors' has been a matter of debate. The Act does not mention the word 'STIPEND' anywhere under the definition of salary u/s 17(1) of the Income Tax Act.
The tax treatment of such stipend can be as follows:
1. If such stipend is received as a scholarship [exempt]:
As per Section 10(16) of the Income Tax Act,1961 - 'scholarship granted to meet the cost of education' is exempt from income tax. Hence, if the stipend is paid for someone to support their education. Research fellowships, grants received from universities are all exempt. It doesn't matter if the person exhausted the entire money or saved a part of such amount, as long as it has been paid for someone's pursuit of education.
2. If stipend received is in lieu of salary [taxable]:
Stipend income of doctors on Training in hospitals shall be taxable since they perform duties similar to other full-time doctors and the work experience from the traineeship can further their career.
The stipend letter may or may not include a break up like a salary letter does. This may or may not be similar to the employment letter offered to a full time employee. However, if this payment is made for you to gather an experience and perform services similar to an employee, such stipend income shall be taxable.
Other details:
Head of Income: Salary (esp. if Form 16 issued by hospital).
Deductions: No expenditure is allowed against such stipend. But one can claim Chapter VIA deductions, if any.
Return of Income: to be filed if gross total income exceeds Rs. 2.5 Lakhs p.a.
Ajit Hegde
(CA - Final)
(1367 Points)
Replied 14 February 2017
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