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Taxability on stipend

Abhay Sakaria ([Practicing C.A.] [C.S. Final]) (283 Points)

09 March 2013

Whether Stipend is Exempt or not? If Yes, please give reference of supporting section or case law.

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10 Replies

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 09 March 2013

Abhay ji,

Stipend is exempt u/s 10(16) of the Act.

Polease refer " Sudhir Kumar Sharma V.s ITO (1983) 17TTJ (JP- Trib) 228

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Santosh Mishra (AM) (1135 Points)
Replied 09 March 2013

Though I am not sure but think it is taxable either under salary income or income from other sources in some cases

/experts/stipend-of-article-is-it-taxable-222200.asp

Generally it is taxed under the head salary, I know that in Ernst & Young intern are taxed on stipend.

krina (student) (1263 Points)
Replied 10 March 2013

Pl. go though the Link Below Which is Answered by an Expert

/experts/case-law-for-exemption-of-stipend-from-income-tax-81591.asp#.UTxDCdZTAsc

(Guest)

Originally posted by : Santosh Mishra
	Though I am not sure but think it is taxable either under salary income or income from other sources in some cases /experts/stipend-of-article-is-it-taxable-222200.asp Generally it is taxed under the head salary, I know that in Ernst & Young intern are taxed on stipend.

Santhoshji, I think to tax under head Salary there must be "Employer Employee relationship"

In case of Stipend in CA Firms, there is princpal and article na...

Santosh Mishra (AM) (1135 Points)
Replied 11 March 2013

Originally posted by : Jiju Oommen
	Originally posted by : Santosh Mishra Though I am not sure but think it is taxable either under salary income or income from other sources in some cases /experts/stipend-of-article-is-it-taxable-222200.asp Generally it is taxed under the head salary, I know that in Ernst & Young intern are taxed on stipend. Santhoshji, I think to tax under head Salary there must be "Employer Employee relationship" In case of Stipend in CA Firms, there is princpal and article na...

Hi Jijuji

Yes, I mentioned that either is taxable as salary or as Income from other sources. But annual income of an article is taxable if exceeds the basic exemptioin limit i.e 200,000.

Please follow belown link, it would give you a fair idea and also inputs given my experts on Sudhir Kumar Sharma Vs ITO

/experts/taxability-of-stipend--401315.asp

Also as mentioned in my previous comments I have seen in EnY that stipend given to article clerks are taxed.

CA Deepak Rathore (EXPERT) (281 Points)
Replied 11 March 2013

A stipend received to meet the cost of education may be treated as scholarship being exempt under Section 10(16) of the Income-Tax Act, 1961. Scholarship would necessarily mean some payment to meet the cost of education to the person pursuing the education and incurring costs on it.

CA Asfar Hashmi (Research Associate) (81 Points)
Replied 11 March 2013

Stipend is not taxable and is exempt u/s 10(16) as mentioned supra. Further there is a Jaipur ITAT judgement shared by Mr Ketan which also clarifies the same.

As far as witholding of tax is concerned by EY, I also did my articleship with EY and no tax was deducted from my stipend.

Cheers!!

Santosh Mishra (AM) (1135 Points)
Replied 11 March 2013

Originally posted by : CA Asfar Hashmi
	Stipend is not taxable and is exempt u/s 10(16) as mentioned supra. Further there is a Jaipur ITAT judgement shared by Mr Ketan which also clarifies the same. As far as witholding of tax is concerned by EY, I also did my articleship with EY and no tax was deducted from my stipend. Cheers!!

I think you have not gone thru the link I provided in my previous message, please have look at opinion provided by some experts. This will also clarify on judgment given by Jaipur bench almost Three decades back (1983).

/experts/taxability-of-stipend--401315.asp

As long as your internship with EY is concerned, it is possible that your annual stipend had not exceeded basic exemption limit applicable for that particular year/years.

But I am sure it is taxed there, I am so confident because I worked in EY. I was a part their Finance team (SSC) and I used to handle payroll particularly payroll taxations for all employees including interns.

CA Asfar Hashmi (Research Associate) (81 Points)
Replied 12 March 2013

EY recruits articles on secondment as well and pay them stipend as professional fees thereby witholds tax u/s 194J. Once an intern is registered with them, there is no TDS implications irrespective of the threshold exemtion limit.

They might have started deducting tax lately since you have worked with SSC and have experienced the same.

Santosh Mishra (AM) (1135 Points)
Replied 12 March 2013

Originally posted by : CA Asfar Hashmi
	EY recruits articles on secondment as well and pay them stipend as professional fees thereby witholds tax u/s 194J. Once an intern is registered with them, there is no TDS implications irrespective of the threshold exemtion limit. They might have started deducting tax lately since you have worked with SSC and have experienced the same.

You may be right.

But as told earlier, I was handling payroll taxation and we used to deduct TDS u/s 192 from all the employees & interns registered as per ICAI.