TDS on Stipend

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CA AJAY GUPTA (Querist)
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18 May 2010 Dear Respected Prof.

Pl. provide your opinion on following situation:

A resident Indian went abroad for study of MBA course from a foreign university. After 6 months he came back in India for 3 months internship with an Indian company. The Indian company is paying stipend to him @ 15K per month. What would be the treatment of the same as per Income Tax Act. Pl. also mention is there any professional tax payable on the same.

Thanx & Regards,

Ajay Gupta
New Delhi

CMA.Palani Arumugam

CMA.Palani Arumugam (Expert)
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18 May 2010 Stipend would be treated as salary. Since the stipend is paid for 3 month. total stipend will be Rs.45000/- per annum which is below the taxable income limit. Hence tds is not applicable. Profession tax of Rs.200 per month will be deducted.

CA Shiv

CA Shiv (Expert)
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18 May 2010 aagreeee...

Provided he dont have any other taxable income which exceeds the minimum limit...

CA Gangadhar Mishra

CA Gangadhar Mishra (Expert)
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18 May 2010 treat stipand as salary

CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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18 May 2010 stipand is exempt from tax.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 May 2010 If the stipend is paid only to meet the cost of education exemption under section 10(16) can be claimed.

Citation :- CIT Vs V.K.Balachandran (1984) 147 ITR 4 (Mad).

Kariyappa

Kariyappa (Expert)
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19 May 2010 Stipend is treated as salary but Intership not a professional. intership so tds and income tax not applicable

taxindiaconnect

taxindiaconnect (Expert)
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19 May 2010 The section 10(16) is specifically for scholerships, internship is not a scholership but a kind of payment in the nature of salary, taxable under section 17.

CA.Pujah

CA.Pujah (Expert)
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19 May 2010 I would like to differ here with the above experts.

1) How can we treat stipend as salary? If it is a part of the MBA course just like we do CA articleship, the Employer-employee relation will not be there. And in that case it would not be treated as salary.

2) Rather it will be taxable as income from other sources.

3) Exemption u/s 10(16) is specifically for scholorships. In the case CIT Vs V.K.Balachandran (1984) 147 ITR 4 (Mad). as referred above, the 2 questions of law were whether the stipend was income & whether it is exempt under sec 10(16) to which the learned judges replied first in affirmative & later in negative.

With due respect I would like the experts to thinkover & if I m wrong kindly enlighten me.

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taxindiaconnect

taxindiaconnect (Expert)
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19 May 2010 Thanks pujah for giving the right interpretation. I agree.

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CMA RV Padmakumar.A

CMA RV Padmakumar.A (Expert)
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23 May 2010 Plz , whether stipend is exempted u/s 10(16)??? i think stipend can be treated as a scholarship u/s 10 (16)

CA Shiv

CA Shiv (Expert)
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23 May 2010 @ Padmakumar:
Pls read explanaation of Pujah... She is correct.
Its stipend is taxable and is not exempt...

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