scholarship-taxation?

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2010 a student getting scholarship and he is goin to kenya.. he is thinking of saving some money of scholarship and giving it to his mother who living in india..whether the saving wil be taxable which he giving to his mother? mother is dependent...

CA Kalpesh Gokani

CA Kalpesh Gokani (Expert)

28 June 2010 No neither scholarship nor any savings from scholarship is taxable.

Querist : Anonymous

Querist : Anonymous (Querist)

28 June 2010 thanks a lot. bt i need to clarify 1 thing.. as per sec.10(16), if scholarship money is used for meeting the cost of education it is exemp. bt if used for some other purpose then it wil be taxable under income from other sources.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

23 July 2025 You’re right to bring up that point. Here’s a clear explanation:

### Taxation of Scholarship under Indian Income Tax Act:

* **Section 10(16)** exempts scholarships granted to meet the cost of education from tax.
* If the scholarship is **used solely for education-related expenses**, then **it is fully exempt** from income tax.
* However, if the scholarship amount or any portion of it is **used for non-educational purposes**, such as saving or spending on personal items unrelated to education, then that part **may be taxable under “Income from Other Sources.”**

### In your case:

* The student receives the scholarship, which is exempt when used for education.
* If the student saves some money (not spent on education) and **gives it to his mother**, that saved amount is essentially **his income (non-educational use)**, which **could be taxable** in his hands.
* However, since it’s a gift to a dependent mother, the **gift itself is not taxable in the hands of the mother** as gifts from relatives are exempt under Section 56(2)(vii).

### Summary:

| Aspect | Tax Implication |
| -------------------------------------------- | ------------------------------------------------------- |
| Scholarship used for education expenses | Fully exempt (Sec 10(16)) |
| Scholarship saved or used for other purposes | Taxable as Income from Other Sources in student’s hands |
| Gift to mother (dependent) | Not taxable in mother’s hands (relative gift exemption) |

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If you want, I can help you draft a detailed note or letter on this for official use.

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