Income Tax applicability on Stipend given to Medical College PG students

[TCR Advanced]

Sirs,

Does Stipend granted to post-graduate Medical Students attract Income Tax?

AI Summary

Are Postgraduate Medical Stipends Taxable? Ambiguity in Classification as Scholarships or Salaries Under Income Tax Act Section 10(16) A query was raised about whether stipends given to postgraduate medical students are subject to income tax. The response highlighted the ambiguity in the Income Tax Act regarding whether stipends are classified as scholarships or salaries. This classification depends on the contractual terms between the institution and the recipient. Judicial precedents suggest that stipends can be considered scholarships, thus exempt from taxes, if agreements specify their purpose. However, tax authorities may view them as salaries if the work resembles that of regular employees. A case cited was Rahul Tugnait vs. ITO, where stipends were deemed scholarships and exempt under section 10(16).