Taxability of stipend received

taxable 

'Whether to tax stipend income in hands of doctors' has been a matter of debate. The Act does not mention the word 'STIPEND' anywhere under the definition of salary u/s 17(1) of the Income Tax Act.

The tax treatment of such stipend can be as follows:

1. If such stipend is received as a scholarship [exempt]:

As per Section 10(16) of the Income Tax Act,1961 -  'scholarship granted to meet the cost of education' is exempt from income tax. Hence, if the stipend is paid for someone to support their education. Research fellowships, grants received from universities are all exempt. It doesn't matter if the person exhausted the entire money or saved a part of such amount, as long as it has been paid for someone's pursuit of education.

2. If stipend received is in lieu of salary [taxable]:

Stipend income of doctors on Training in hospitals shall be taxable since they perform duties similar to other full-time doctors and the work experience from the traineeship can further their career.

The stipend letter may or may not include a break up like a salary letter does. This may or may not be similar to the employment letter offered to a full time employee. However, if this payment is made for you to gather an experience and perform services similar to an employee, such stipend income shall be taxable.

Other details:

Head of Income: Salary (esp. if Form 16 issued by hospital).

Deductions: No expenditure is allowed against such stipend. But one can claim Chapter VIA deductions, if any.

Return of Income: to be filed if gross total income exceeds Rs. 2.5 Lakhs p.a.

 

In my opinion it is not taxable. Stipend is generally given as a compensation or scholarship to meet the exp while studying a part of the course, similar to articleship. Stipend is given while one undergoes a training.

Moreover, there is no employee-employer relationship to be taxable as Salary.

If at all it is to be taxed, it ll be taxable under other sources