Tax Applicability For Stipend

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.

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.

Hi sir i have submitted pf form on 1 oct 2013 and now i m checking the status
in epfo its showing that they recieved my pf settlement on 4 nov now how many days it will.
to.get settled .

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

Trainees /apprentice appointed by Government are exempted from IT for the stipend paid to them. I am not clear as to how much you intend paying the sales trainee. If it is within the tax limit there is no problem. If it exceeds the limit then better to treat him as a Trainee on temporary basis and deduct 10% of the tax.

Tax limit means which limits??? Limts specified under TDS sections other than 192 or as per section 192?
Can please provide some reference/notification of exemption on stipend paid by Govt?? I am not able to under stand why 10% TDS, when trainee cannot be professional. consultants other than professionals TDS rate is either 2% or 1%.
Best Regards,
Divakar

How trainees can be treated as consultants? On completion of training period, they are going to be on regular rolls. Is itn't? If the stipend is less than 2L p.a., tax implications are not there.
Pon

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??
2.0 Lakh limit comes into picture only if you treat trainee as employees and there is an employer empployee relationship and deduct TDS u/s 192B. Is a trainee under stipend for a specified period is an employee for IT purpose???

During training in a business enterprises, employer-employee relationship is developed. There is no specific exemption is 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

1) :) "Employer employee relationship" is a contractual term, which law recognises to be in existance when certain conditions are fulfilled. If you have studied income tax act, especially topics related to salary income, you may appriciate this better.

2) If we are assume that there is a employer employee relationship in appointing trainee, all labour laws like EPF/ESI are applicable to them too.

3) if there is a employer emlyee relationship, then TDS is under section 192B - there is no confusion whatsoever and apply relavant provisions.

4) As far as i know, stipend paid as per Apprentice act, is exempt from TDS and one need to register under this Act and follow the stipulations there in. (I am yet to come accross such registrations)

5) Usually in industry, trainees are not under regular employment and hence it is a contractual understanding and TDS is decuted as per the provisions contained in section 194C. Trainees are not consultants nor professionals. Stipened being a small amount and usually below taxable limit, even 1% is huge TDS and normally refunds are to be claimed.

Best Regards,

Divakar