What is a Stipend?
Stipend is a regular pay given to individuals for fulfilling their basic livelihoods needs while learning or working experience. It is usually not tied to an employment contract and is mostly paid in a non-employment setup.
It is a financial support or backing given to motivate the morals of individuals as well as to empower them to bear their own expenses while focusing on the learning and working experience. Stipend is mostly assigned to individuals doing research works (PhD, internships, or trainees).
The purpose of a stipend is to help individuals cover daily costs like housing, food, or transport while participating in a non-traditional job or program. It is paid regularly each month like a salary but is usually lesser in amount and is paid on the basis of participation and not performance. However, since it is not a ‘salary’, a salary slip is not provided, and there is no salary slip format associated with it.
Monthly Stipend Meaning
Monthly stipend is the amount of regular pay given to individuals as stipend for mostly non-employment programs to support their basic monthly livelihood. It can include varied types of stipend such as internship stipends which is provided to interns monthly to support their learning along with basic expenses, educational stipend etc.
The nature of monthly stipend is a fixed sum which is a supportive allowance rather than a salary. It is not tied to professional work hours or hourly pay concept. The taxation on monthly stipend depends on local governmental policies and local tax laws.
How Does Stipend Work?
Providing Stipend works in the following steps:
Step 1: Providing enrolment and registration link or portal to the public in general.
Step 2: Selection of suitable individuals as per the eligibility criterion.
Step 3: Documentation- collection of necessary ID proofs, bank account details and documents of candidates or professionals.
Step 4: Conditions that requires a tick such as minimum qualifications, daily attendance, research progress reports or daily updates, etc
Step 5: Application of tax laws if any.
Step 6: Disburse of Stipend amount to candidates account.
Types of Stipend
Stipends are provided in a range of circumstances and for diverse reasons, resulting in several distinct types based on their purpose.
➔ Internship Stipend
Internship stipend is paid to the interns in partial pay basis. Internships are usually unpaid or partially paid, so, this is given to interns for the purpose of enabling them to cover their travel, food and other basic needs. The amount paid as stipend in low as compared to other types of stipends and is common in NGOs, government programs, media sectors, etc.
➔ Educational Stipend
Educational stipend is paid to the students alongside scholarships or fellowship programs. It is paid during research or study term to the students to support their living expenses and basic needs while focusing on learning and development of skills and knowledge. The people who avail educational stipend amount are graduate student, research assistants, etc.
➔ Medical Stipend
Medical stipend is provided to the residential medical students or medical interns to support their basic livelihoods during the medical practicing period. These are provided on merit basis to the deserving candidates with meritorious marks to motivate them and empower them by making them financially independent at least to cover their basic needs.
➔ Creative Stipend
Creative stipend amount is provided to artists or creative individual possessing creativity skills such as writers, artists, or performers as support while they focus on creative work. It is usually provided by cultural associations, art councils and government sponsored cultural committees to encourage artist to pursue a career in art and keep the art and culture alive.
➔ International Exchange Stipend
International exchange stipends are usually larger in amount as compared to other stipend types. It is provided to students or professionals participating in global exchange programs to cover their costs of travelling, accommodation and other abroad expenses incurred while they travel or stay. It is usually provided by government, Universities and colleges, International organizations, and Foundations, etc.
➔ Government Stipend
Government stipend is provided to students, farmers, unemployed youth, etc. to support their development. The stipend amount is sanctioned by the government to individuals directly or to third parties to conduct governmental development programs such as DDU-GKY skill development programs that is focused on training the rural youths and providing them jobs. Government stipend is also given to research scholars for government research scholarships.
➔ Fellowship Stipend
Fellowship stipend is provided to fellows during academic, research, or professional programs. The purpose of fellowship stipend amount is to provide individuals with research support such as travel allowance made for travels done for research work, doctoral or postdoctoral fellowships etc. It is usually provided by government, Universities, colleges and academic institutions.
Calculation of Stipends Paid:
If you have deployed an HRMS or payroll software, it makes the process of stipend calculations easier. However, you can also calculate it manually using any of the following 4 ways:
1. Fixed Monthly Rate x Duration
Stipend amount= Monthly amount x No. of months (program month, internship duration, etc)
2. Daily Rate x No. of days
Stipend amount= Daily Rate x No. of days Present
3. Hourly Rate x Hours Worked
Stipend amount= Hourly Rate x No. of Hours
4. Lump sum Amount
It is a lump sum amount paid at the end of the internship or research program. It is not paid in monthly basis or in regular interval.
For Example- A Research programs provide Rs. 70,000 for 7 months in lump sum .
Why is Stipend Given?
Stipends are given for multiple purposes and for varied reasons to various individuals usually in a non-employment setup. It is a backing given to individuals for managing their basic expenses while focusing on their learning and training sessions.
Here are other few reasons that outlines why stipend is given and what is its significance.
- To support the basic living expenses of individual pursuing training and learning courses. It also includes basic costs like food, transport, or housing while the person is involved in an unpaid or partially paid role.
- To encourage individual in joining internship, fellowship or research programs to avail the research grants. To increase the footfall of individuals in such sectors and to motivate their morale to pursue such opportunities, stipend is provided.
- To ensure that programs like the art, craft and research works stays relevant in the technological world where AI takes over human creativity.
- To provide financial relief to individuals or students or professionals. Stipends ensures enhancing focus of students on learning and development and increasing their skills rather than struggling with financial crisis of managing the basic living costs while learning.
- To ensure equal access by making programs more inclusive by helping those who might not otherwise afford to participate. This provides financial assistance to individuals with greater creativity and merit ensuring financial lacking won’t become a hurdle in their path of accomplishing greater works.
Eligibility for Stipend
The eligibility criteria for receiving a stipend varies as per varied programs policies, local governmental rules, and type of organization providing it. However, here are a few generic parameters that help to determine the eligibility criteria for stipends.
1. Enrolment
The first basic criteria are the enrolment or registration that is to be done for the program. If not enroled or registered for any program, then getting stipend will not be possible. Enrolment in a specific program, training, research sessions, or fellowship is necessary to receive a stipend.
2. Nationality
In many programs the Nationality plays a crucial game of eligibility selection. Where some demands the nationality to be Indian while other international programs demands the nationality to be NRI, or citizens of other countries etc.
3. Merit
Some stipends are given on the basis of performance or merit of students or professionals for their exceptional showcase of knowledge and skills. Stipend eligibility criteria for certain program demands the merit or performance excellence in certain field to avail a stipend.
4. Financial Needs
Stipend is provided on the basis of financial needs or requirement of the individual. Some government stipends act or plans are designed to support the below the belt individuals having yearly income less than a certain amount. These are designed to meet the financial requirement of such individuals while motivating them to pursue research.
5. Attendance or Participation
Some government programs require daily attendance of individuals or daily participation in the implemented programs to avail stipends. This becomes an eligibility criterion for individuals to attend the sessions or programs at least to the bare minimum duration possible to avail a stipend.
6. Age Limit & Minimum Qualification Criteria
Many programs have age limit or minimum qualification criterion requirements for stipend. For example the minimum age limit must be 18 ad minimum education-Graduate. Likewise, for higher research or doctorate programs the minimum qualification is to qualify NET (National eligibility test) and master’s degree in a specific course.
End Note
Stipend amount is a financial backing that is provided in non-employment types programs to support individuals financially and also motivate their creativity to learn and train for enhancing proficiency and valuably contribute to the subject. While, various stipend programs have varied requirements and criteria’s to fulfill, the generic requirement that prevails in each stipend program is the enrolment in the program with authentic submission of ID proofs and documentations. Stipends amounts are a great way of encouraging creative minds to come forward and pursue learning while keeping away from financial stress.
FAQs on Stipend
1. Is a Stipend taxable
The taxation on stipend is dependent on the country’s tax laws, the purpose of the stipend, and the type of program it’s linked to. However, if the total stipend amount exceeds the taxable tax slot as per new tax reigme then it will be taxable.
2. Is PF applicable on Stipend
No, provident fund (PF) is not applicable on stipend or internships program.
3. How is a Salary different from a Stipend?
Salary is tied to employment setup and stipend is usually given in non-employment setup such as in internships programs, doctorate research programs, fellowships, etc.
4. Do interns get Stipend or Salary?
Interns usually gets stipend as the term of internship is not permanent rather it is for limited duration for which the interns usually receive a stipend or work for free to gain industry knowledge.
5. How often are Stipends paid?
The frequency of stipend paid can vary as per company policies, programs laws, or other norms. However, stipends in general are paid either monthly, in lump sum, daily or hourly depending on the agreement of policies.
