Tax on stipend

shyam (Student) (24 Points)

11 June 2011  

I am an MBA student. I was recruited by a company during my summer placements to work with them as a summer intern for 2 months. I would like to know under what act does the stipend i received from them (Rs 80,000 ) get taxed. I am under the impression that stipend is considered as salary and is taxed under the appropriate income tax slab whereas the company insists that it is taxed according to IT 194J under "professional services" . This doesn't make sense to me as i'm neither a contractor nor a freelance consultant. Can you please clarify as to how stipend should be interpreted ? Thanks, in advance !