Need to recruit a Sales Trainee...but not on rolls. How should I treat such recruitment?. Should there be any tax deduction while paying the stipend. If so, under what section.
From India, Bangalore
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From India, Bangalore
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Hi Instead of recruiting as Trainee under Stipend you shall consider them as Consultant. If recruited under the Consultant the you should deduct TDS at 10% as professional fee.
From India, Bangalore
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653From India, Bangalore
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Hi!! Why not deduct TDS under section 194C? Professional fee - there is a definition under IT Act, which trainee do not fulfil. Best Regards, Divakar
From India, Bangalore
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From India, Bangalore
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Trainees/apprentices appointed by the government are exempt from income tax for the stipend paid to them. I am not clear as to how much you intend to pay the sales trainee. If it is within the tax limit, there is no problem. If it exceeds the limit, then it is better to treat him as a trainee on a temporary basis and deduct 10% for tax purposes.
From India, Madras
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From India, Madras
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Tax limit means which limits? Limits specified under TDS sections other than 192 or as per section 192?
Can you please provide some reference or notification of exemption on stipend paid by the Government? I am not able to understand why there is a 10% TDS when a trainee cannot be a professional. For consultants other than professionals, the TDS rate is either 2% or 1%.
Best Regards,
Divakar
From India, Bangalore
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Can you please provide some reference or notification of exemption on stipend paid by the Government? I am not able to understand why there is a 10% TDS when a trainee cannot be a professional. For consultants other than professionals, the TDS rate is either 2% or 1%.
Best Regards,
Divakar
From India, Bangalore
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Treating Trainees as Consultants
How can trainees be treated as consultants? Upon completion of the training period, they will transition to regular employment, isn't it? If the stipend is less than ₹2 lakh per annum, there are no tax implications.
Regards,
Pon
From India, Lucknow
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How can trainees be treated as consultants? Upon completion of the training period, they will transition to regular employment, isn't it? If the stipend is less than ₹2 lakh per annum, there are no tax implications.
Regards,
Pon
From India, Lucknow
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There was an opinion to treat them as consultants and deduct 10% TDS in the post; hence, I am asking how can you do that?
Understanding TDS for Trainees
The 2.0 Lakh limit comes into the picture only if you treat the trainee as an employee and there is an employer-employee relationship, which requires TDS deduction under section 192B. Is a trainee under stipend for a specified period considered an employee for IT purposes?
From India, Bangalore
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Understanding TDS for Trainees
The 2.0 Lakh limit comes into the picture only if you treat the trainee as an employee and there is an employer-employee relationship, which requires TDS deduction under section 192B. Is a trainee under stipend for a specified period considered an employee for IT purposes?
From India, Bangalore
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During training in a business enterprise, an employer-employee relationship is developed. There is no specific exemption available for stipend or training allowance, and it will be treated as income under the head of salaries. However, the stipend/scholarship received for meeting the cost of education or research is exempted from income tax. Many court rulings are available for this.
Pon
From India, Lucknow
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Pon
From India, Lucknow
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Employer-Employee Relationship in Trainee Appointments
The "employer-employee relationship" is a contractual term recognized by law when certain conditions are fulfilled. If you have studied the Income Tax Act, especially topics related to salary income, you may appreciate this better.
If we assume that there is an employer-employee relationship in appointing a trainee, all labor laws like EPF/ESI are applicable to them as well.
If there is an employer-employee relationship, then TDS falls under section 192B. There is no confusion whatsoever, and relevant provisions apply.
As far as I know, the stipend paid as per the Apprentice Act is exempt from TDS. One needs to register under this Act and follow the stipulations therein. (I am yet to come across such registrations.)
Usually, in the industry, trainees are not under regular employment. Hence, it is a contractual understanding, and TDS is deducted as per the provisions contained in section 194C. Trainees are not consultants nor professionals. Since the stipend is a small amount and usually below the taxable limit, even 1% is a huge TDS, and normally refunds need to be claimed.
Best Regards,
Divakar
From India, Bangalore
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The "employer-employee relationship" is a contractual term recognized by law when certain conditions are fulfilled. If you have studied the Income Tax Act, especially topics related to salary income, you may appreciate this better.
If we assume that there is an employer-employee relationship in appointing a trainee, all labor laws like EPF/ESI are applicable to them as well.
If there is an employer-employee relationship, then TDS falls under section 192B. There is no confusion whatsoever, and relevant provisions apply.
As far as I know, the stipend paid as per the Apprentice Act is exempt from TDS. One needs to register under this Act and follow the stipulations therein. (I am yet to come across such registrations.)
Usually, in the industry, trainees are not under regular employment. Hence, it is a contractual understanding, and TDS is deducted as per the provisions contained in section 194C. Trainees are not consultants nor professionals. Since the stipend is a small amount and usually below the taxable limit, even 1% is a huge TDS, and normally refunds need to be claimed.
Best Regards,
Divakar
From India, Bangalore
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As per my best knowledge, any trainee coming for training purposes is indirectly stating that their approach is to acquire knowledge or skills for the said reason. A stipend is paid, which is a periodic payment, especially a scholarship or fellowship allowance granted to a student. Here, the employee-employer relationship does not exist, and no labor law is applicable, whether it is ESI, PF, MW, TDS, etc.
But I would like the seniors to guide further.
From India, Ahmadabad
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But I would like the seniors to guide further.
From India, Ahmadabad
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You can refer to the cases highlighted in the article: The Hindu: Stipends are not taxable.
Best Regards,
Divakar
From India, Lucknow
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Best Regards,
Divakar
From India, Lucknow
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STIPEND IS ONLY TAX FREE IN CASE OF \"STUDENT\" IS STUDYING ANY COURSE AS PER RULES OF UNIVERSITY OR AICTE THEN ONLY THE STIPEND IS TAX FREE. IT IS CALLED AS \"VIDYA VETAN\". RAMAKANT
From India, Pune
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From India, Pune
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Thank you. The stipend is applicable in the case of an educational institute only. I think, in this case, the payment made to the "Trainee" can be treated as a contractual employee and handled under section 92A. Otherwise, it will fall under u/s 95j.
Regards,
Ramakant
From India, Pune
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Regards,
Ramakant
From India, Pune
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Circular No 1-2018 Processing of income-tax returns under section 143(1) of the Income-tax Act .pdf
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