Stipend

What is a Stipend?

A stipend is a fixed payment made to cover basic living or training expenses while someone learns, trains, or contributes temporarily. Unlike a salary, it supports participation rather than compensating for market-value work.

Stipends are commonly used for internships, fellowships, research assistantships, and apprenticeships. Compared to a salary, they are typically lower in amount, follow more flexible payment schedules, and come with limited or no statutory benefits like PF, ESI, or paid leave.

Note: You will not find “stipend” defined anywhere in India’s core wage and labour laws, including the Apprentices Act, 1961, or the former EPF Act, 1952 and Industrial Disputes Act, 1947. What matters legally is the nature of the relationship. This is why apprentices are excluded from the definition of “employee”: earlier under Section 2(f) of the EPF Act, 1952, and now under Section 2(26) of the Code on Social Security, 2020, which repealed that Act.

Who is Eligible for a Stipend?

Stipends usually go to interns, researchers, teaching or research assistants, clergy, and trainees. Some of these people could earn a full-time salary elsewhere, but companies choose to pay a stipend for these roles instead.

Apprentices under the Apprentices Act, 1961 are a separate group. Employers decide which type of apprentices to take on and in which trades, based on the training facilities they have.

For trade apprentices, the employer pays the whole stipend. For Graduate, Technician, and Technician (Vocational) apprentices, the employer and the Central Government split the cost.

PhD scholars and fellowship recipients are another common group. They’re usually paid a monthly stipend by their university, the UGC, or a similar body, but unlike apprentices, there’s no specific law covering how much they should get.

The Apprentices Act sets minimum stipend rates by category. These were revised upward effective 11 September 2025

Stipend Meaning in Internship

In an internship, a stipend is the fixed monthly amount a company pays an intern instead of a salary. It usually doesn’t come with the benefits a regular employee gets.

India has no single law that says every internship must be paid. The one exception is apprentices under the Apprentices Act, 1961, who must be paid a stipend. For everyone else, an unpaid internship is usually fine as long as it’s short-term, focused on learning, and doesn’t have the intern doing a regular employee’s ongoing work. If it does, authorities can treat it as real employment and order back pay.

A “stipend-based internship” just means the intern gets a fixed amount for the term, without being on the company’s regular payroll.

Stipends vary a lot, but ₹10,000 a month for a summer intern’s travel and meals is a fairly typical example. Remote internships sometimes add a smaller amount on top, like ₹2,000 a month for internet or home-office costs.

Types of Stipends

Stipends usually fall into a few types, depending on who’s paying and why.

Academic Research Stipend

Pays researchers so they can focus on their work instead of worrying about income. Usually comes from universities, government bodies, or private research grants.

Job Training or Apprenticeship Stipend

Covers trainees and apprentices while they learn job-specific skills. For example, a manufacturing firm might pay shop-floor apprentices around ₹7,000 a month to learn machinery operations. This is the category apprenticeship stipends under the Apprentices Act, 1961 fall under.

Wellness and Expense Stipends

Fixed monthly amounts for things like gym memberships, home internet, or wellness programs, often alongside a remote-work allowance like the one mentioned earlier.

Consolidated Stipend

This is about how the payment is structured, not why it’s given. Instead of splitting the amount into parts like a regular pay slip would, a consolidated stipend is just one fixed number with no breakup. It’s common in short-term or informal setups like internships, freelance work, or trial roles, where a full pay structure isn’t needed. It works the same way as a “consolidated salary,” just for a stipend recipient instead of an employee.

Stipend vs Salary: Key Differences

Stipends and salaries are both fixed payments, but they differ in purpose and structure.

How a stipend differs from an honorarium

An honorarium is different. It’s a one-time, voluntary payment for something like a guest lecture or a panel appearance, and the amount can’t be fixed in advance. Once a fee is agreed beforehand, it’s no longer an honorarium, it becomes a professional fee. A stipend is different: it’s recurring and tied to a structured program or an ongoing period of participation, not a one-off appearance. The simplest way to tell them apart: if it’s recurring and not up for negotiation, it’s likely a stipend. If it’s a one-time, goodwill gesture, it’s likely an honorarium.

PF and ESI applicability

Stipend recipients usually aren’t treated as employees, so PF and ESI don’t normally apply to them. This is spelled out clearly for apprentices: the Code on Social Security, 2020 (Section 2(26)) excludes apprentices engaged under the Apprentices Act, 1961 from its definition of “employee”, as the EPF Act did before it, and the Supreme Court has upheld this. When PF and ESI do apply to a paid arrangement, PF is mandatory up to ₹25,000 a month (raised from ₹15,000, effective 17 September 2026) and ESI up to ₹21,000 a month in wages, though both limits can change.

How Stipends Work in India

A stipend is meant to support the person receiving it, not to benefit the organisation paying it. For apprentices, this is written into law: Rule 11 of the Apprenticeship Rules, 1992 sets out how their stipend works. India doesn’t have a broad, US-style framework covering stipends in general, this rule is the closest thing, and it only applies to apprentices.

Rule 11(3) says the stipend for a month must be paid by the 10th of the next month, straight into the apprentice’s bank account. Trade apprentices are paid differently: a percentage of the minimum wage for semi-skilled workers in their state, which goes up each year of training.

Note: this percentage-based table applies specifically to trade apprentices. The flat rupee amounts in the eligibility section above apply to Graduate, Technician, and school-pass-out categories instead.

Is Stipend Taxable in India?

There’s no simple rule that says a stipend is always taxable or always exempt. Tax authorities and courts look at each case based on why the payment was made.

Section 10(16) of the old Income Tax Act exempts scholarships given to cover education costs, with no upper limit. Under the Income-tax Act, 2025, this exemption has moved to Schedule II, item 9 of the new Act.

A stipend can qualify for this exemption too, as long as it’s genuinely meant to cover education or training costs rather than pay for work done. What it’s called doesn’t matter, why it’s paid does.

In practice, here’s how it usually plays out: resident doctors are taxed like salaried employees, since their work is similar to a full-time doctor’s. CA and CS articled clerks have generally been treated as tax-exempt, based on the idea that their stipend covers training costs, not services (the key case here is Sudhir Kumar Sharma vs ITO, 1983). MBA and engineering interns, on the other hand, are usually taxed as salary, since their work looks a lot like a regular employee’s.

If the company deducts TDS and gives you a Form 16, your stipend is taxed as salary. If they don’t, you still need to report it yourself, usually under Income from Other Sources, once your total income crosses the basic tax-free limit. Check out our TDS glossary entry to understand how that works.

Frequently Asked Questions

How often are stipends paid?

Usually monthly. For apprentices, Rule 11(3) of the Apprenticeship Rules, 1992 says the stipend must reach their bank account by the 10th of the following month.

Is a stipend the same as a scholarship or fellowship?

Not quite. A scholarship or fellowship can include a stipend, but not always. A scholarship pays for education itself; a stipend covers your living costs while you’re in the program.

Can interns negotiate stipend amount?

Sometimes. Even if the stipend itself is fixed, interns can often negotiate smaller things around it, like travel allowance, flexible hours, mentorship, or a certificate, without it costing the company much. Bigger companies with structured internship batches tend to be less flexible on this.

Can stipend recipients claim HRA or other deductions?

Generally, no. If a stipend is taxable, you can’t deduct expenses from it, same as with a salary. HRA and most other salary-linked deductions only apply to employees on payroll, not stipend recipients, since a stipend isn’t treated as salary income by default. If it is taxed as salary instead (TDS deducted, Form 16 issued), then the usual salary deductions can apply.

Do stipend recipients get experience letters?

Most companies give one at the end of the term, but it’s not something they’re legally required to do.

Related Reads

• Provident Fund (PF)
• ESI (Employee State Insurance)
• Tax Deducted at Source (TDS)
• ITR Filing
• Salary Breakup
• The Apprentices Act, 1961