I am the HR in a start up company. We hire paid interns on a short term and long term basis. But I am unclear on how does a company account for the stipend paid to the interns? And whether we are supposed to deduct taxes on the stipend payments.
If someone could guide me on this, would be really helpful.
From India, Chennai
If someone could guide me on this, would be really helpful.
From India, Chennai
Hi, Internship is part of college curriculum wherein students are expected to undergo professional , practical work experience. Normally internship period will be for a period 3- 6 months range. If you are hiring interns on long terms basis then it is not at all internship but it should be considered as employment. The amount should be treated as salary and not as stipend. Salaries are always subject to TDS provided if it exceeds the limits as stipulated by Income Tax Dept.
From India, Madras
922From India, Madras
Thank you Lakshmi for your response. I would like to have a deeper understanding on the front for 3-6 months internship. How do we account that stipend? Are there any thresholds for tax deductions?
From India, Chennai
From India, Chennai
Hi,
It depends on the Employer.
Many Employers allow Interns without stipend whereas some Employers pay some meagre amount.
Mostly short term internships with stipends are exempted from tax. Please refer the following for more clarity.
https://cleartax.in/s/are-stipends-taxable
From India, Madras
It depends on the Employer.
Many Employers allow Interns without stipend whereas some Employers pay some meagre amount.
Mostly short term internships with stipends are exempted from tax. Please refer the following for more clarity.
https://cleartax.in/s/are-stipends-taxable
From India, Madras
What is the amount of stipend?
From accounting point of view, Stipends are similar to salary and needs to be accounted in the same way.
For TDS, I suggest you talk to your CA or Auditor who will help you decide on it.
Other statutory dues, PF, ESIC are applicable if the internship is not under Apprentice Act.
From India, Mumbai
From accounting point of view, Stipends are similar to salary and needs to be accounted in the same way.
For TDS, I suggest you talk to your CA or Auditor who will help you decide on it.
Other statutory dues, PF, ESIC are applicable if the internship is not under Apprentice Act.
From India, Mumbai
What is the purpose of calling the 'remuneration' for having employed them as 'stipend'. The terms 'stipend' is pertinent to Apprenticeship trainees. And I don't understand as to how you can categorise them as 'interns' which again applicable for students as part of their curriculum. In fact you are engaging these people for ST & LT and they are indeed employees, you can call them as 'contract employees' (not as 'interns' in Indian practices. Some other nations such terms are used) if you engage them from 'licensed contractor' under CLRAct. On the other hand if you are paying their 'salary/wages' directly then there is 'employer-employee' relationship established. Your practice now followed can be seen as 'misleading' with suspicious motives, it cannot hold good.
From India, Bangalore
From India, Bangalore
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TDS circular.pdf
Format--new TDS rates.xls
Sample Internship Offer Letter.doc