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.
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:
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.
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.
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.
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.
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).
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.
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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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.
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.
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.
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.
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.
