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Circular on section 10(16) on Fellowship to Foreigners

Stipend under Colombo Plan and SCAAP

Certain foreign nationals come to India for receiving training in various courses of study under the Technical Co-operation Scheme of the Colombo Plan and the Special Commonwealth African Assistance Plan (SCAAP). During the period of their training in India, these trainees are paid a living allowance varying from Rs. 200 to Rs. 600 p.m. It has been decided that the above living allowance payable to the trainees would be exempt from tax under section 10(14)/10(16).

Source :Income-tax Circulars, published by the Directorate of Inspection (Research, Statistics and Publication), 1968 edition, p. 89.

National research fellowships to German national awarded by Ministry of Education

The Ministry of Education, Government of India, have recently instituted the following fellowships :

National research fellowships in science and technology are awarded on the all-India basis for post-doctoral work in any branch of science or technology in universities and other institutions of university standard in India. Each fellowship is of the value of Rs. 400 p.m. and grant of Rs. 1,000 per year is also given for any special apparatus or equipments required for research. Each fellowship is tenable for a period of 3 years. In special cases, it may be extended up to 5 years with the sanction of the Government.

Fellowships to German nationals studying in India under German Industrial Co-operative Scheme - Since 1952, the Government of India have been awarding 10 fellowships to German nationals every alternative year under the Indo-German Industrial Co-operative Scheme for the study of Indian languages, religion and philosophy, etc., at Indian universities. The normal period of award is 2 years. The benefits given under each fellowship are as follows :

   a.  maintenance allowance at the rate of Rs. 500 per mensem;

   b.  second class railway fare from the place of residence in Germany to the port of embarkation and back;

   c.  second/tourist class sea passage from the port of embarkation to the port of disembarkation in India and back; and

   d.  first class railway fare from the port of disembarkation in India to the place of study in India and back.

The Board have decided that these fellowships should be treated as scholarships granted to meet thecost of education and exempted from tax under item (5) of the late Finance Department Notification No. 878-F (Income-tax), dated 21-3-1922.

Circular :No. 49(XXIII-12), dated 13-12-1956.

Fullbright Grants to American Students

Attention is invited to the Board’s Letter No. 46(83-IT/54), dated 6-8-1954 according to which Fulbright Grants, described as “maintenance allowances”, are exempt from income-tax in respect of Fulbright Students.

The United States Educational Foundation in India has now represented that the grants given to American “tutors” are also intended to cover the expenses for their maintenance while they are prosecuting certain studies in India and, as such, these should be treated as exempt under section 10(16). The Ministry of Education are satisfied that the maintenance allowance of Rs. 1,000 per month paid to the American tutors is for their maintenance and that the purpose of the allowance is to meet the cost of education. The Board have, therefore, decided that the Fulbright grant described as “maintenance allowance” given to American tutors may be treated as exempt from tax under section 10(16).

Letter :F. No. 24/22/67-IT(A-I), dated 7-7-1967.

Maintenance Allowance to Foreign students under  IAESTE scheme –

 India is a member of the International Association for the Exchange of Students for Technical Experience (IAESTE). Under this scheme, Indian students are sent abroad for training in other member countries and in return foreign students come to India for training in industries/organisations/technical institutions, participating with this scheme in India.

The foreign trainees coming to India are paid a maintenance allowance of Rs. 400 per month. It has been decided that the maintenance allowance paid to foreign trainees, coming under the exchange scheme of IAESTE should be treated as “scholarships granted to meet the cost of education” and exempted from payment of income-tax under section 10(16).

Letter :F.No. 24/4/64-IT(A-I), dated 12-2-1964.