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Stipends for Financial Preparations
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| Here is the income tax and accounting treatment for stipends: 1. Income Tax on Stipend for CA Articleship: - Stipend received by CA articled assistants is taxable as 'Income from Other Sources' under Section 56 of the IT Act — it is not salary. - However, since most articled assistants' total income (including stipend) remains below the basic exemption limit (Rs. 2.5 lakh / Rs. 3 lakh for below 60 years), practically no tax is payable in most cases. - If stipend + any other income exceeds the basic exemption limit, the articled assistant must file an ITR and declare the stipend income. 2. TDS on Stipend: If the CA firm pays stipend exceeding Rs. 2.5 lakh/year to an article, TDS under Section 192 (if treated as salary) or Section 194J (if treated as professional fees) may apply. Most firms treat it as salary and deduct TDS accordingly. 3. Accounting in the CA Firm's Books: - Stipend paid is a deductible business expense under Section 37(1) of the IT Act for the firm. - Debit: Stipend Expense A/c - Credit: Bank/Cash A/c 4. Minimum Stipend: ICAI has prescribed minimum stipend rates for articled assistants — non-payment or underpayment is a violation of ICAI regulations and can be reported to ICAI. 5. PF/ESI: Typically not applicable to articled assistants since they are not 'employees' under the EPF Act — confirm basis your specific arrangement. |
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