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Stipend taxable


mohan (self)     24 November 2020

mohan
self 
 34 points

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1.Students are paid stipends for pursuing certain academic courses.  When it self exceeds individual's taxable limit of income, whether itr to e filed?

& Whether it is to be subjected to TDS?

Prashant Jha

Prashant Jha   24 November 2020

Prashant Jha

 16 points

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IT Act, 1961 does not mention stipend. As per Section 10(16), scholarship is exempt from taxation.
However, as long as the purpose of paying stipend is educational, it is not taxable. In case of medical practitioners practising in hospitals and graduates receiving income to learn services just like other employees, it will be considered as salary and taxed accordingly.
If employer has given Form 16, then also it becomes a salary is not a stipend anymore. If Form 16 is not given and stipend is taxable, it will be taxed under income from other sources.
ITR filing is necessary if stipend income exceeds 250000.

veerendar singh

veerendar singh   26 November 2020

veerendar singh

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Mr prashan can you quote the section under which you claim stipend for educational purpose as non-taxable.

Prashant Jha

Prashant Jha   26 November 2020

Prashant Jha

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The Act does not mention the word "stipend" anywhere in the body. The closest we get is scholarship in 10(16). Therefore, the purpose of paying stipend should be taken into account. If it is purely for academic purposes, then it counts as a scholarship and is not taxable.

veerendar singh

veerendar singh   27 November 2020

veerendar singh

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You are getting confused between stipend and scholarship. by no stretch of imagination can stipend be equated with scholarship.
one must firstly try to understand the nature and objectives behind the intership agreement. ordinarily its that students seek to get a practical exposure under a professional. for the student this becomes a calling for the specified period and he is also paid some meagre amount as he performs some activities for the organisation. hence there is a bilateral consideration. Alternatively if stipend is said to be received without any consideration then provisions of s. 56(2) has to be called for. By no means stipend can be said to be scholarship.

Prashant Jha

Prashant Jha   27 November 2020

Prashant Jha

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I am not getting confused. What you said I have mentioned. If taxable, it will be taxed as income from other sources like in case of graduates in internship or practising doctors if Form 16 is not provided. However, research grants or payment for experience at a place where you will not be ordinarily and exclusively working or residing will not be taxable as stated in 56(24)(iiia) and 56(24)(iiib).

veerendar singh

veerendar singh   27 November 2020

veerendar singh

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Not only you are confused, you are fuddled too. you have quoted some dehors impenetrable sections which do not exist in the act. prashant you need to understand that it is purely commercial transaction when one is paid for getting experince at a place. since one is not qualified, he is only paid meager amount to meet basic expenses like commuting. its just like an underqualified person employed at half salaray for some years before bringing him on roll at full fledged salary.

Prashant Jha

Prashant Jha   27 November 2020

Prashant Jha

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My mistake. I meant of Section 2. However, what I have stated is same as you. I agree. It is just that reserch grants are actually treated as scholarship and not stipend.

veerendar singh

veerendar singh   27 November 2020

veerendar singh

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So its proved that you got confused. the querist had specifically asked for stipend. research grants is completely different thing. i appreciate your knowledge and application about 10(16).

Prashant Jha

Prashant Jha   27 November 2020

Prashant Jha

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Stipend does not need necessarily to have such a narrow definition.


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