She got Rs 18.34L medical stipend, got notice for no tax paid; what ITAT said
The Income Tax Appellate Tribunal (ITAT) in Delhi ruled that a medical student's stipend is exempt from income tax under Section 10(16) of the Income Tax Act. The ruling clarifies that stipends intended to support education are not taxable, distinguishing them from compensation for services rendered.
Why it matters
This provides a legal precedent for students and researchers in India regarding the taxability of academic grants and stipends, impacting how educational institutions structure payments.
Is the stipend you receive as part of your scholarships taxable? A postgraduate medical student received a stipend of Rs 18.34 lakh from Aligarh Muslim University during her PG Medical course and compulsory residency training. She treated the amount as exempt from income tax under Section 10(16) and did not pay tax on the stipend.The Income Tax Assessing Officer from ITO, Sonipat, however, took a different view. The officer treated the stipend as taxable salary rather than as an exempt scholarship under Section 10(16), thereby adding the amount to her taxable income. The Commissioner of Appeals (CIT A) upheld the AO's decision.The taxpayer then challenged the order before the Income Tax Appellate Tribunal (ITAT) Delhi.
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