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Stipend is treated in which head????

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 kajol asked over 3 years ago

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Lynette Lobo commented over 1 year ago

Classification of Stipend under the heads " Income from Salary" or "Income from Other Source" will depend on the terms under which stipend is being paid. In order to be classified as ‘Income From Salary’ it must be received by an ‘employee’ from an 'employer' and taxable in the hands of the employee. Under Section 17(1) – Wages, pension, gratuity, fees or commission or profits in lieu of salary, advance salary, payment for leaves standing to the credit of the employee have all been included under the definition of salary. It is evident when a salary is paid,an employer-employee relationship exists. Section 10(16) of the Income Tax Act,1961 lays down that "scholarship granted to meet the cost of education" is exempt from Income Tax. When Stipend is paid to further a person’s education, we need to test whether it qualifies as a Scholarship. The person may exhaust this money fully or may end up saving some of it , as long as this has been paid purely in pursuit of a person’s education and is in the nature of a scholarship it shall be exempt. This will have no relation to the position of the person. Usually, Articles pursuing CA may earn Stipend, or a professor may receive stipend for carrying on research work. The purpose of such payment is of importance here and not the value or the way this has been spent. Research fellowships, grants received from universities may all be exempt when their nature is to support further education. If your payer has already deducted tax and issued you a form 16 this shall be taxed under the head Salaries otherwise this is usually taxed under the head Income from Other Sources.

12 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pankaj answered almost 3 years ago

If the stipend is earned as an employee of an organization in India, and you are sponsored by such a organization, the employer-employee relation should be established and in that event the stipend becomes taxable under the head the salaries. In the absence of an employer-employee relation, the stipend becomes taxable under the head income from other sources. If the stipend is taxable as salary, the deduction available to you is standard deduction. If it is taxable under the head income from other sources, then you can claim any other expenditure laid out or expended wholly and exclusively for the purpose of earning of stipend income. This deduction is allowable under Section 57 (iii) of the Income-tax Act

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 HIMANSHU answered over 3 years ago

Stipend is exemp u/s 10(16)

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 ajay pandey answered over 3 years ago

Stipend is included in income from other source, as there is no employer and employee relationship. While computing income it is fully exempt as per 10(16) of income tax Act, 1961.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Lynette Lobo answered over 3 years ago

Classification of Stipend under the heads " Income from Salary" or "Income from Other Source" will depend on the terms under which stipend is being paid. In order to be classified as ‘Income From Salary’ it must be received by an ‘employee’ from an 'employer' and taxable in the hands of the employee. Under Section 17(1) – Wages, pension, gratuity, fees or commission or profits in lieu of salary, advance salary, payment for leaves standing to the credit of the employee have all been included under the definition of salary. It is evident when a salary is paid,an employer-employee relationship exists. Section 10(16) of the Income Tax Act,1961 lays down that "scholarship granted to meet the cost of education" is exempt from Income Tax. When Stipend is paid to further a person’s education, we need to test whether it qualifies as a Scholarship. The person may exhaust this money fully or may end up saving some of it , as long as this has been paid purely in pursuit of a person’s education and is in the nature of a scholarship it shall be exempt. This will have no relation to the position of the person. Usually, Articles pursuing CA may earn Stipend, or a professor may receive stipend for carrying on research work. The purpose of such payment is of importance here and not the value or the way this has been spent. Research fellowships, grants received from universities may all be exempt when their nature is to support further education. If your payer has already deducted tax and issued you a form 16 this shall be taxed under the head Salaries otherwise this is usually taxed under the head Income from Other Sources.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Rupesh Nigam answered over 3 years ago

Stipend is fully exempt. Please refer the below case for details..Google for this case and you will find the answer yourself. SUDHIR KUMAR SHARMA. Versus INCOME TAX OFFICER. - Income Tax - ITAT JAIPUR - Tri - - 1983 (4) TMI 109 - ITAT JAIPUR - TTJ 017, 226, - - - Dated:- 30-4-1983

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Ghanshyam Sharma answered over 3 years ago

If employer employee relations create than is taxable in salary head and relations not create than its taxable in other sources and deduction for expenses..

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 deepak garg answered over 3 years ago

Other Sorces Haead

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Prabhash answered over 3 years ago

The main difference between a salary and a stipend is the fact that a salary is paid in return for the work provided by an employee to the employer, whereas a stipend is paid to supplement the intern or apprentice for the time they put in to learn the trade, as opposed to the work they do. Once the internship or apprenticeship is over, then the intern or apprentice may be taken on by the company as an employee, wherein the stipend would be replaced by a salary. In case of a salary PF and Profession Tax is applicable whereas in case of a Stipend these two taxes are not applicable. Hence both should be coming under a separate heads as far as accounts are concern. Regarding taxability it will depend upon factors such as purpose of stipend given nature of training etc, whether it will be exempt or taxable under other source.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 ashish answered over 3 years ago

usually stipend does not cross basic exemption limit. if it falls above exemption limit it will be taxable under salary head. as many of our friends says there is no employer - employee relationship exists, i'm totally disagree with that because a article work as an employee. even institute also use employer word in article ship form. it will also exempt from taxablity as it given to meet educational expenses. stated in many case laws. and you may also show this in income from other source but in that case you can not avail exemption in 10(14) & 10(16).

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 sandesh answered over 3 years ago

If the stipend is earned as an employee of an organization in India, and you are sponsored by such a organization, the employer-employee relation should be established and in that event the stipend becomes taxable under the head the salaries. In the absence of an employer-employee relation, the stipend becomes taxable under the head income from other sources. If the stipend is taxable as salary, the deduction available to you is standard deduction. If it is taxable under the head income from other sources, then you can claim any other expenditure laid out or expended wholly and exclusively for the purpose of earning of stipend income. This deduction is allowable under Section 57 (iii) of the Income-tax Act ‘61.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Prabhash answered over 3 years ago

You have to show Stipend as Stipend only and not as Salary because Employer, Employee Relation doesn't exist.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Karun Agarwal answered over 3 years ago

SALARY HEAD...............

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