Is a stipend from my foreign university taxable in India?
Usually not, and you do not need any exemption to get there. India taxes a non-resident only on income that is received or deemed to be received in India, or that accrues or arises or is deemed to accrue or arise in India. That is Section 5(2) of the 1961 Act, and the 2025 Act keeps the same rule at Section 5(2). A stipend, teaching assistantship, research assistantship or scholarship from your university abroad, for studying or working abroad and paid into your account abroad, does neither. So if you are a non-resident for the year, it is simply outside India's tax net, whether it is a true scholarship or pay for teaching. The one exception to watch: pay for work you do while you are physically in India, such as a summer internship during a trip home, is Indian income even if it is paid into a foreign account. Your host country may tax it under its own rules, and that is a separate question for there.
This is different from the Section 10(16) question further down this page. Section 10(16) matters when the money comes from India, or when you are resident in India for the year. For a non-resident student paid abroad, the answer comes one step earlier: the income is not Indian income in the first place. If a student has Indian income as well, such as NRO interest or rent, that Indian income is still taxed in the normal way.
The year you leave India to study: the trap
Whether you are a non-resident is decided for the whole financial year (April to March), under Section 6, which keeps its number in the 2025 Act. You are resident if you are in India for 182 days or more in the year, or for 60 days or more in the year and 365 days or more in the four years before it. There is a relaxation: for an Indian citizen who leaves India for employment abroad, or as a crew member of an Indian ship, only the 182-day test counts (Explanation 1(a) to Section 6(1) of the 1961 Act, Section 6(3) of the 2025 Act). Leaving to study is not on that list.
So take a student who has lived in India all their life and flies out in mid-August for a master's degree. They were in India well over 60 days that year and far more than 365 days in the four years before, so they are resident for that whole financial year even though they were in India under 182 days. Having lived here for years, they are usually also ordinarily resident (the not-ordinarily-resident relief is for people who were mostly non-resident in earlier years), which means their worldwide income for that year is in the Indian net. For that one year:
| Money received abroad in the year you leave | Indian tax position |
|---|---|
| Scholarship or fellowship to meet the cost of education | Exempt, whatever the source (Section 10(16); from tax year 2026-27, Schedule II, S.No. 9 of the 2025 Act) |
| Teaching or research assistantship paid for work | Taxable as salary; claim credit for any foreign tax paid on it (Form 67, Form 44 from tax year 2026-27) |
| Foreign bank account you held during the calendar year | List it in Schedule FA, the foreign assets part of the return, if you are resident and ordinarily resident |
From the next year, once you are outside India for most of the year, you are usually a non-resident and the first section applies. Coming home for the holidays does not usually change that: an Indian citizen who lives abroad and visits India becomes resident only at 182 days, unless their Indian income, excluding foreign income, is above ₹15 lakh, when a 120-day test and in some cases deemed residence can apply (see the 120-day rule).
What to do if you left India to study this year or last year:
1. Count your days in India for the financial year you left, from your passport stamps or travel dates. For safe planning, count both the day you arrive and the day you leave. 2. If you were in India under 182 days that year, and either under 60 days that year or under 365 days over the four years before, you are a non-resident and only Indian income (NRO interest, rent) matters. 3. If you were resident, the return for that year should show assistantship pay as salary, the education scholarship as exempt, and a claim for credit for foreign tax paid on the salary (Form 67, Form 44 from tax year 2026-27). 4. If you were resident and ordinarily resident, list foreign bank accounts in Schedule FA.
A practising CA can confirm your status for the year you left and file that year's return correctly.
A scholarship to help you study is fully exempt
The good news first. A scholarship granted to meet the cost of education is exempt from income tax under Section 10(16). There is no monetary ceiling, and the source does not matter, government, a university, an institute, an employer or a private trust all qualify. The only test is that the purpose is to meet the cost of education, which is read broadly to include tuition, fees, and the incidental costs of study. Your residency does not change this, so an NRI receiving an Indian scholarship for education is exempt just as a resident student would be.
A question people worry about is what happens if the scholarship is generous and they save some of it. The courts have settled this in the recipient's favour. In CIT v. V.K. Balachandran [1984] 147 ITR 4 (Mad), the court held that whether the grant is adequate, inadequate or even in excess of the actual need is beside the point, it is enough that the whole object is to meet the cost of education, so a scholar who saves part of it still gets the full exemption. A genuine research fellowship, given to let you pursue study or research, is treated the same way, as an exempt scholarship.
The line: a stipend paid for work is taxable
The exemption is about helping you learn, not paying you to work, and that is where the sharp line falls. If what you receive is really consideration for services, a paid internship, a hospital residency, an apprenticeship or a job where you are paid to do work, it is taxable as salary, not an exempt scholarship, however it is labelled. The courts have drawn exactly this line. In Dr. V. Mahadev v. CIT, an internship stipend that was paid as wages, with tax deducted, was held to be taxable pay, the court noting that such payments do not cease to be salary and become metamorphosed into a scholarship simply because of the name.
So the practical test is purpose, not the word used. Paid to learn, with no work extracted in return, points to an exempt scholarship or fellowship. Paid to work, with the money being the reward for services, points to taxable salary. When it is the taxable kind and the payer is in India, tax is withheld at source, under the salary withholding rules for an employment stipend, or under Section 195 where it is paid to a non-resident as non-salary income. A practising CA looks past the label, fixes whether your grant is exempt or taxable, and sorts the withholding and any refund.