I am the HR in a start-up company. We hire paid interns on a short-term and long-term basis. However, I am unclear on how a company accounts 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, it would be really helpful.
From India, Chennai
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If someone could guide me on this, it would be really helpful.
From India, Chennai
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Internship is a part of the college curriculum wherein students are expected to undergo professional, practical work experience. Normally, the internship period will be in the range of 3-6 months. If you are hiring interns on a long-term basis, then it is not an internship but should be considered as employment. The amount should be treated as a salary and not as a stipend. Salaries are always subject to TDS if they exceed the limits stipulated by the Income Tax Department.
From India, Madras
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1153From India, Madras
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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
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From India, Chennai
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Hi,
It depends on the employer.
Many employers allow interns without a stipend, whereas some employers pay a meager amount.
Mostly, short-term internships with stipends are exempted from tax. Please refer to the following for more clarity:
https://cleartax.in/s/are-stipends-taxable
From India, Madras
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It depends on the employer.
Many employers allow interns without a stipend, whereas some employers pay a meager amount.
Mostly, short-term internships with stipends are exempted from tax. Please refer to the following for more clarity:
https://cleartax.in/s/are-stipends-taxable
From India, Madras
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What is the amount of stipend?
From an accounting point of view, stipends are similar to salary and need to be accounted for 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 such as PF and ESIC are applicable if the internship is not under the Apprentice Act.
From India, Mumbai
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From an accounting point of view, stipends are similar to salary and need to be accounted for 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 such as PF and ESIC are applicable if the internship is not under the Apprentice Act.
From India, Mumbai
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The purpose of referring to 'remuneration' as 'stipend' when employing individuals is crucial, especially in the context of Apprenticeship trainees. It is important to note that the term 'stipend' is specifically relevant to this group. Categorizing them as 'interns', a designation typically reserved for students as part of their educational curriculum, may lead to confusion. These individuals are engaged for short-term (ST) and long-term (LT) roles and should be recognized as employees. In Indian practices, they are more accurately described as 'contract employees' rather than 'interns'. This distinction becomes clearer when engaging them through a 'licensed contractor' under the CLRAct. Conversely, if you are directly providing their 'salary/wages', it establishes an 'employer-employee' relationship. The current approach you are employing might be perceived as 'misleading' with questionable intentions, and it may not be considered appropriate.
From India, Bangalore
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From India, Bangalore
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TDS circular.pdf
Format--new TDS rates.xls
Sample Internship Offer Letter.doc