Are Study Abroad Scholarships Taxable?

Are Study Abroad Scholarships Taxable? Everything You Need to Know

Quick answer: In India, section 10(16) of the Income-tax Act, 1961 exempted scholarships granted to meet the cost of education; the Income-tax Act, 2025 has been in force since 1 April 2026, replacing the 1961 Act, so check the matching provision. Abroad, it depends on the country and on what the money pays for. In the USA, for example, money used for tuition and required course costs can be tax-free, while money for rent, food and travel is taxable.

This is general information, not tax advice. For your own situation, talk to a qualified tax adviser.

A scholarship can cut the cost of studying abroad a lot. Before you accept one, it helps to know whether any part of it could count as taxable income, in India or in the country where you study. At Shiksha Galore, students ask us this often, so here is what we know and where to check.

What are study abroad scholarships?

Study abroad scholarships are awards that help pay for tuition, living costs, or both, while you study in another country. They can be based on merit or need, and they can come from governments, universities or private organisations. Unlike a loan, you don't pay them back.

Are study abroad scholarships taxable in India?

Under the old law, no, if the scholarship was granted to meet the cost of your education. The Income Tax Department's exempt income page says: "Section 10(16): Any scholarship received for meeting the cost of education is exempt from tax."

The picture can change if part of the money is really payment for work, such as teaching or research duties. That part may be treated as income.

India's Income-tax Act, 2025 has been in force since 1 April 2026, replacing the Income-tax Act, 1961. Under the 1961 Act, section 10(16) exempted scholarships granted to meet the cost of education. Check the matching provision in the 2025 Act on the Income Tax Department's website, or ask a tax adviser. Sources: CBDT press release, 1 April 2026; Income-tax Act, 2025.

Are study abroad scholarships taxable in the destination country?

Each country has its own rules, and they usually depend on what the money pays for.

United States

The US Internal Revenue Service (IRS) explains this in Topic 421, Scholarships, fellowship grants and other grants. A scholarship is tax-free if:

• you are a candidate for a degree, and
• the money is used for tuition and required fees, or for books, supplies and equipment your course requires

Money used for room and board, travel or optional equipment is taxable. So are payments for teaching, research or other services you must provide to receive the money.

If you are planning to study in the USA, check how your scholarship is split between tuition and living costs.

United Kingdom

Scholarship income in the UK is dealt with by HM Revenue and Customs (HMRC). If your scholarship includes a stipend, or if you have to work as part of it, check how it is treated on GOV.UK or with your university's international office. If you are planning to study in the UK, ask the university about this before you accept the offer.

Australia and Canada

In Australia, tax is handled by the Australian Taxation Office (ATO). In Canada, it is handled by the Canada Revenue Agency (CRA). Each has its own rules on scholarships, stipends and payments for work. Check with the authority or your university's international office. For Canada, see also our guide to scholarships and education loans for Canada.

What the money pays for matters

Scholarships come in different forms, and the tax position can differ for each:

• Tuition waivers or fee discounts: money that pays only your course fees
• Living stipends: money for rent, food and day-to-day costs
• Research or teaching assistantships: money paid in return for work
• Travel grants: money for flights or travel

In the USA, the IRS treats money for tuition and required course costs differently from money for living costs or for work, as explained above. Other countries draw their own lines, so check the rules where you will study.

How to report a scholarship

If any part of your scholarship is taxable, you may have to declare it on a tax return in that country. Your university may issue a tax form. Check with its international office, which usually has guidance for international students.

Tips for managing a scholarship

• Keep records: save your award letter and receipts showing how the money was spent.
• Read the award letter: it should say what the money is for, such as tuition, living costs or work.
• Talk to your university: international offices often have guidance on scholarships and tax.
• Speak to a qualified tax adviser about your own situation, in India and abroad.

Common myths about scholarships and tax

• Myth 1: All scholarships are tax-free. Not always. In the USA, for example, money for living costs is taxable.
• Myth 2: Only income from a job is taxable. Payments for teaching or research duties attached to a scholarship can count as income.
• Myth 3: Scholarships abroad are never relevant to Indian tax. It depends on your situation, so check before you file in India.

How Shiksha Galore can help

At Shiksha Galore, we offer:

• free study abroad counselling
• guidance on university applications
• visa guidance
• guidance on scholarship registration

We don't give tax advice. For tax questions, please speak to a qualified tax adviser.

Contact Shiksha Galore for free counselling

Exploring scholarships for your study abroad plans? Book free counselling with Shiksha Galore:

• Enquire online: book free counselling with our enquiry form
• WhatsApp: +91 93563 71683
• Call: +91 80107 22713 (Mon to Sat, 9am to 6pm)

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