Tax on stipend

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shyam

Student

21 Points Posted on 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 !

Replies (5)

Arvind Sharma

ACA

1090 Points Posted on 11 June 2011

It will be taxed under Salary Head and accordingly TDS will deducted u/s 194....

Because, 194J is applicable in case of Fee for Professional or Technical Fee, and you are not providing any professional/technical service....

CA. Roopali Kadam

Jobs on assignment basis.

967 Points Posted on 11 June 2011

1) how can it be charged under salary. there is no emplyer-employee relationship

2) Our CA Articleship stipend we show in Income from other sources. then why not this stipend?

3) And if company insists it as 194J, why not show business income and claim expenses that may have incured for internship?This may help if his total income exceeds taxable limits and if he is having material exps will save tax

Dheeraj

Learner

1263 Points Posted on 11 June 2011

as per my opinion, its under other incomes.

and shyam, is there only matter of tds deduction or tax matter, as if its the matter of only tds than you will get the refund, and if its matter of tax deduction than the same slab is to be followed in both the cases.

So, no diff. whether charged as salary or other sources