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What is a Stipend and How Does It Work?

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Created on
November 22, 2023


What’s Inside

Salary is one of the most common types of regular income available in India. However, before you earn a salary, you may be involved in a program or internship that offers you a stipend instead. It’s essential to understand what the meaning of a stipend is and how it works. That way, you can make the most of your stipend and negotiate it better. 

What is a Stipend? 

According to the definition of a stipend, it is a fixed sum of money that is offered to people who are involved in otherwise unpaid work. The purpose of the stipend is to help the recipient meet various expenses like accommodation, food, transportation and other costs related to the work. 

By the very meaning of stipends, it’s evident that they are only paid to those who are not eligible for regular salaries or wages. This includes students of post-graduate programs, interns, researchers, apprentices and the like. Some common types of stipends include: 

  • Internship stipends, paid to interns to meet their costs of living during the internship
  • Research stipends, paid to graduates and researchers engaged in academic research
  • Fellowship stipends, paid to those who are engaged in research or advanced studies under a fellowship programme
  • Non-profit stipends, paid to those who volunteer with non-profit charitable organisations

How do Stipends Work?

Now that we’ve defined stipends, let’s understand how they work by delving deeper into the various components involved. 


To be eligible for a stipend, you need to meet the strict criteria in place. They may include certain performance levels or enrollment in an internship or research programme. Before you enrol in a program, make sure you read up on the eligibility criteria for stipend payments. 

Purpose of Payment

The main purpose of stipends is to allow the recipient to meet the costs incurred for the research or the work done as a part of the programme. Most stipends are also intended to cover other basic expenses like accommodation, food and other costs of living. 

Negotiation of Stipends

Depending on the nature of the programme, you may be able to negotiate your stipend slightly. To ask for a higher payment, ensure that you are aware of the average stipend paid to individuals in similar roles or programmes. Your request may also be better substantiated by data about how a higher stipend may be required on account of the expenses incurred for the work. 

Frequency of Payment

Stipends are typically paid monthly. Some programmes or organisations may pay weekly or bimonthly stipends too. The frequency depends on the policies of the organisation and the particulars of the programme. 

Taxability of Stipends

The taxability of stipends depends on the nature of the payment. Stipends paid as scholarships to meet educational expenses are tax-free under section 10(16) of the Income Tax Act. However, other types of stipends are taxable as income. If your stipend is tax-free but the organisation has deducted tax at source, you can claim a refund by filing your Income Tax Return (ITR). 

Stipend vs. Salary: The Key Differences

Most people are aware of how salaries work. So, if you want to better understand the concept of stipends, it may help to see how they differ from salaries. The table below encapsulates this.




Fixed and Variable Components

Generally fully fixed in advance

May include both fixed and variable components

Nature of Recipients 

Interns, research or post-graduate students, apprentices etc.



To support education, research, internships or specific projects

To compensate the employee for their regular job-related responsibilities

Frequency of Payment

Monthly but can also be bimonthly or weekly

Predominantly monthly

Additional Benefits

Rarely available

Often includes additional benefits like health insurance, retirement plans, and paid leave

Duration of Payment

May be short-term or long-term, depending on the programme

Typically ongoing for as long as the employment relationship continues


Mostly taxable, except stipends paid out as scholarships

Basic salary is always taxable under the Income Tax Act


With this, you may now have a clearer idea of what the meaning of a stipend is and how it works. If you are receiving stipends as a part of your internship or post-graduate program, ensure that you understand the factors involved. Depending on the nature of your stipend, you may also be liable to pay income tax on the same. 

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Frequently Asked Questions

1. What is a stipend, and how does it differ from a salary or wage?

A stipend is the payment made to trainees undergoing an internship or apprenticeship. However, a salary or wage is paid to employees of an organisation. 

2. How is a stipend typically awarded, and what types of individuals or groups are likely to receive stipends?

Stipends are typically paid to individuals undergoing an internship. Some groups who are likely to receive stipends include students, researchers, artists and other types of interns. 

3. Is a stipend considered taxable income, and what are the tax implications for those receiving stipends?

Stipends that are paid out as scholarships are tax-free u/s 10(16) of the Income Tax Act. However, internship or research stipends are generally taxable as income. 

4. What are the common purposes for offering stipends, and are there any specific obligations or requirements associated with receiving a stipend?

Stipends are generally paid to support certain expenses of the recipient, such as the cost of education, research or academic endeavours. The obligations or requirements associated with stipends vary widely. 

5. Can a stipend be negotiated or adjusted, and what factors influence the amount of a stipend?

Stipends can sometimes be negotiated. However, in most cases, they are predetermined by the organisation paying the stipend. Factors like the recipient’s qualifications and experience, expenses involved and funding available determine the stipend amount.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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