Scholarships & Education Grants: Are They Taxable?

Are scholarships taxed?

In general, no — scholarships, other similar grants and education allowances are usually exempt from income tax in Malaysia.

This exemption comes from paragraph 24 of Schedule 6 of the Income Tax Act 1967 (ACP 1967), which exempts:

In other words: if you receive a scholarship from a university, employer, government or other body, the amount is generally not included as your taxable income.

What does this exemption cover?

The paragraph 24 exemption covers:

• Scholarships — financial assistance based on merit or need.
• Other similar education grants — assistance of the same nature as a scholarship.
• Allowances — support payments to an individual, whether or not in connection with employment.

Important: Do not assume that all student financial assistance is exempt. This exemption only covers scholarships/grants/allowances within the scope of paragraph 24. Loans (for example PTPTN) are loans, not income — they are not counted as taxable income, but they are also not "exempt" as scholarships.

Child scholarships and child relief

If your child receives a scholarship, the amount is not treated as the child's income for the purposes of child relief. This is provided under subsection 48(5) of the ACP 1967 — you can still claim child relief as usual without reducing your claim because of a scholarship your child received. (Source: Explanatory Notes for Form BE YA 2025; Explanatory Notes for Form B YA 2025 — R2, R3.)

What about a student's other income?

The exemption above only covers scholarships/grants/allowances. A student's other income — for example salary from part-time work — is subject to the ordinary tax rules and is reported like other employment income. This item still awaits official confirmation from HASiL — check again with HASiL before deciding.: further details on the treatment of student part-time work income need to be verified from official sources before being detailed.

Related questions

Are scholarships from an employer exempt? The paragraph 24 exemption reads as absolute in the text of the Act — it applies whether or not the scholarship is connected with your employment. However, any interpretation of specific circumstances (for example allowances connected with salary) needs to be confirmed with HASiL. This item still awaits official confirmation from HASiL — check again with HASiL before deciding.

Are research grants taxed? Grants of the same nature as a scholarship may be covered by paragraph 24, but the definition of "similar grants or allowances" (for example cost-of-living allowances versus payments for services) needs to be verified from the text of the Act/Notes before being detailed. This item still awaits official confirmation from HASiL — check again with HASiL before deciding.