Stipend received by PG Doctors Taxable or Exempt?

Shailesh J. Mehta School of Management top summer placement stipend Rs 2.80 lakhThe participating students bagged offers in the summer placements from 40 participating companies, the institute said in a release. A stipend is typically awarded to employees periodically, after measuring their performance and cost-of-living increases. Bonuses and salary increases are typically based on performance and cost-of-living increases. Employees can choose whether to take advantage of stipends or not throughout the year, since the amounts change.

  • All these conditions and terminology used therein clearly suggest, firstly, the impugned amount is a scholarship/stipend for further studies and not a salary.
  • The MBA or engineering graduates working as interns perform work similar to that of a regular employee and are paid a stipend for their work.
  • So if the stipend amount is very less you may consider above judgement and try to convince your employer..But if the stipend amount is big enough it will be taxable.
  • If your research qualifies for the RTP and you come from a qualifying country or are considered a domestic student, then you will also qualify for the stipend.
  • Employees can choose whether to take advantage of stipends or not throughout the year, since the amounts change.
  • While it mentions that colleges should pay a stipend, no mention of the amount has been made.

The act provides that ‘scholarship granted to meet the cost of education’ is exempt from Income Tax under Section 10. Further, the Act defines the term ‘Salary’, which covers Wages, Pension, Gratuity, Fees or Commission or Profits in lieu of salary, Advance salary & Payment of leaves standing to the credit of the employee. Salary also demands the existence of an employer-employee relationship. This was what sparked all the debates, whether stipend is to be considered as ‘Salary’ or as ‘Scholarship’. Under the curriculum of the Chartered Accountancy Course, it is compulsory for a student to undergo practical training from a practicing CA firm for the prescribed period.

Income Tax

31st Jan., 2008 has clearly termed the impugned amount as ‘stipend’ to the post-graduate student. By checking this box, you confirm that you have read and are agreeing to our terms of use regarding the storage of the data submitted through this form. Get notified about the latest career insights, study tips, and offers at Leverage Edu. These are the personal views of the author and the is not responsible in regard to correctness of the same. Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion.

“Stipend” is defined as a “fixed common sum paid as a salary or allowance.” This definition is a better fit for the travel healthcare business. Using the term stipend helps avoid confusion with the healthcare the slope of iso-quant explains business’s use of per diem as meaning daily or on-name staffing. A stipend is a payment made to a trainee or learner for living expenses, unlike a salary or wages which are paid to an employee.

India Dictionary

It could also be contended that when the doctors are paid stipend by the hospital, although they are working as part of gaining a higher degree, they are also performing all the duties in the profile of a regular, full-time employee. Their hours are more or less same when compared with a permanent employee at the hospital. This makes their stipend liable to taxation, especially when their agreement doesn’t mention anything that points otherwise. It was noted that the payment was not paid to serve the interests of the grantor and also that students undergoing PG Course were not allowed to do private practice or part time job during the entire period of study. Thus, the stipend paid in such cases clearly came under the term ‘scholarship’ and was declared eligible for exemption. Companies generally do not deduct TDS on stipends paid to their interns, but it does not mean that the income would be tax-free.

what is stipend

Shreya Bhandary is a Special Correspondent covering higher education for Hindustan Times, Mumbai. Her work revolves around finding loopholes in the current education system and highlighting the good and the bad in higher education institutes in and around Mumbai. Attendance If the overall attendance in all courses in any semester is less than 75%, no stipend is awarded in the following semester.


The word ‘education’ includes within its ken, knowledge, understanding and reflection. If one is required to travel to a place for the sake of education, the expenditure on travelling will also come within the ambit of the expression ‘cost of education’. Therefore, travel grants given for the purpose of education shall form an integral part of the cost of education. However, it has been held in various judicial decisions that stipend, if given to meet the cost of education while pursuing an educational course, comes under the purview of section 10 and is exempt from tax.

  • In case an Indian student goes abroad and before leaving the country he/she stays in India for 182 days or more then he will be considered as resident in India and in this case, his global income will be taxable in India.
  • These are the personal views of the author and the is not responsible in regard to correctness of the same.
  • A scholarship under section 10 cannot be equated with merit scholarship.
  • This stipend can be tax-free or taxable (if it is a salary e.g from a teaching position).

The doctor is gaining experience from such work and performing duties like regular doctors – in such cases your Stipend may be taxed. The stipend is also treated as salary when an employer deducts TDS under section 192 or issued form no.16. If the employer does not deduct TDS on the amount of stipend or do not issue Form no.16 then stipend is taxable under the head income from other sources based on the nature of training etc. There are certain things you must consider if you receive a stipend. Stipends come with advantages, and one of them is – you keep what you earn as you do not have taxes withdrawn to pay for Social Security and Medicare.

Is scholarship paid to employee or employee’s son is exempt u/s 10(

If you’re paid a stipend, it is not considered wages so you will not pay Social Security or Medicare taxes on it. However, your employer will not withhold any earnings taxes from the stipend. So, you should put aside a number of the cash to pay the taxes you owe at the end of the year. All stipends are paid via Accounts Payable aside from certain athletic living stipends, which are paid through Student Account Services. A stipend is nothing but a cost made to a trainee or a person – who’s a learner – for living bills. This ‘stipend’ amount is a pre-determined sum paid by the employer to assist offset bills.

Students leaving in the middle of a course have to refund the stipend/contingency grant received, if any. At the end of each year/semester, prizes are also awarded for outstanding performance in examinations. The Income Tax Act has laid down that ‘scholarship granted to meet the cost of education’ is exempt from income tax under Section 10. The United States is home to several of the world’s best universities making it a top destination for international researchers. An American PhD begins with two to three years of coursework in order to pass qualifying exams.

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Also, a person undergoing articleship training for a CA firm is given a stipend and is exempted from tax. A stipend is nothing but a payment made to a trainee or a person – who is a learner – for living expenses. It is unlike a salary or wages which an employer pays to an employee. This ‘stipend’ amount is a pre-determined sum paid by the employer to aid offset expenses.

NickStipend received by PG Doctors Taxable or Exempt?