PAYMENT MADE TOWARDS STUDENTS COLLEGE FEES IS NON-TAXABLE
PAYMENT MADE TOWARDS STUDENTS COLLEGE FEES IS NON-TAXABLE
Indian resident students go abroad for studies and they have to incur expenses on account of payment towards fees to university which may include accommodation charges also. Payment made towards college fees is non-taxable whether paid to government or non-government institute as in this case income is not deemed to accrue or arise in India
1. DOMESTIC LAW:
Section 10(16):- Section 10(16) of the Income-Tax Act, 1961, exempts scholarships granted to meet the cost of education. Since it is intended only to cover the cost of education, any savings made out of such grants may well be taxable (CIT vs. V.K. Balachandaran (1984) 147 ITR 4).
2. DTAA Provisions regarding Taxation of Education fees:
- UN MODEL:
As per Article 20 of UN MC “Payments which a student or business trainee or apprentice who is or was immediately before visiting a contracting state a resident of the other contracting state and who is present in the first mentioned state solely for the purpose of his education or training receives for the purpose of his maintenance , education for training shall not be taxed in that state , provided that such income arise from sources outside the state.”
- OECD MODEL:
As per Article 20 of OECD “ Payments which a student or business apprentice who is or was immediately before visiting a contracting state who is present and in the first mentioned state solely for the purpose of his education or training receives for the purpose of his maintenance , education for training shall not be taxed in that state , provided that such income arise from sources outside the state”.
The exemption under Article 20 is intended for foreign students who are temporarily present in the host state and not for those students who intend to remain permanently in the host state (Qing Geng K Li Vs The Queen (1994) IBFD Case No. A-162-93)
Conclusion:
Payment made towards education fees is not taxable in India.
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