Should We Deduct TDS from a Trainee's Stipend? Seeking Advice for Accounting and Audit Concerns

Dear All,

I request your assistance in deciding whether we should deduct TDS from the stipend paid to the trainee who is pursuing studies and has come to our organization for summer training/project. If not, what should our explanation be when it comes to the accounting department and audit personnel?

This is urgent.

Regards,
Manasvi

In my opinion, TDS shouldn't be deducted for the following reasons:

1. Summer trainees do not fall under an employee-employer relationship.
2. The stipend, unless it is exceptionally high, will not exceed the IT limit.

Regards,
Team GroupHR
Email: consult@grouphronline.com

Hi Manaswi,

It is highly unlikely that the trainees would come under the income tax slabs. The very simple reason not to deduct TDS is: as the company is not paying enough annually for the employee to fall into this category. Hence, the company does not have the liability to file the TDS for this particular trainee.

Regards,

But finance people are saying that 11.33% needs to be deducted from his stipend of Rs. 15K per month. I would like to know what practice is being followed in your company for such cases.

TDS is related to the Income Tax Act, so please take guidance from the IT Department. You will get the perfect guideline.