Internships are one of the most poorly managed areas of HR in Indian organisations. Many companies treat interns as free or cheap labour without recognising the legal obligations that come with engaging them. In 2026, with the Social Security Code extending protections to more categories of workers, HR teams need to be clear on what they owe interns — legally and ethically.
This guide covers the legal framework for internships in India, stipend obligations, what interns are entitled to, and how to structure an internship programme that is both compliant and genuinely valuable.
Are Interns Employees Under Indian Law?
This is the most important question — and the answer is: it depends on the nature of the engagement.
If an intern:
— Works fixed hours under the direct supervision of the organisation
— Is assigned regular work duties rather than training or project-based learning
— Receives remuneration for their work
— Is economically dependent on the organisation for the period of the internship
— then there is a genuine risk that a court or labour authority treats them as an employee, with all associated obligations including PF, ESI, minimum wages, and termination protections.
A genuine internship — structured around learning, with the intern having no fixed work duties, not replacing a regular employee, and engaged for a defined period — is generally not treated as employment. The distinction must be clearly documented from the outset.
Stipend — Is It Mandatory?
There is no central law in India that mandates a stipend for all internships. However:
— Several state governments have minimum stipend guidelines for industrial training and apprenticeships
— The Apprentices Act 1961 (covering apprentices in designated trades) mandates stipends at prescribed rates
— Under the National Apprenticeship Promotion Scheme (NAPS), the government shares part of the stipend cost with employers
— For interns who are found to be effectively functioning as employees, minimum wage obligations may apply
Best practice: pay a stipend. An unpaid internship where the intern is doing substantive work is increasingly difficult to defend legally and creates significant reputational risk.
What Are Interns Entitled To?
Under the POSH Act: Interns are explicitly covered. The definition of "aggrieved woman" under the POSH Act includes women interns. Your POSH policy must cover interns and your IC must be accessible to them.
Under the Social Security Code 2020: The Code extends social security provisions to certain categories of gig and platform workers. While traditional interns are not yet formally covered, the direction of policy is toward greater protection for non-permanent workers. HR teams should monitor state notifications.
Under the Apprentices Act (for apprentices): Registered apprentices are entitled to prescribed stipends, defined working hours, and cannot be employed in hazardous processes. They must be registered with the Apprenticeship Adviser.
How to Structure a Compliant Internship Programme
1. Internship Agreement
Every intern must sign a written internship agreement before they start. The agreement should cover:
— Duration and start/end dates
— Nature of the internship — learning objectives, not a job description
— Stipend amount and payment schedule
— Working hours and leave
— Confidentiality obligations
— Intellectual property — work created during the internship belongs to the organisation
— POSH policy acknowledgement
— Confirmation that the internship does not constitute employment
2. Structured Learning Plan
A genuine internship must have a structured learning plan — not just a list of tasks. Define what the intern will learn, who their mentor is, what projects they will work on, and what outcomes are expected at the end of the internship.
3. Stipend Structure
Pay a fair stipend. As a benchmark, internship stipends in India in 2026 range from ₹5,000 to ₹25,000 per month depending on the city, industry, and level of the intern. Metro cities and specialised roles command higher stipends.
4. Internship Certificate
Issue a formal internship completion certificate at the end of the programme. This is one of the most valued outcomes for interns and costs nothing — yet many organisations fail to provide it.
5. POSH Coverage
Explicitly include interns in your POSH policy and induction. Brief interns on who to contact if they experience or witness harassment. This is a legal requirement, not optional.
HR Internship Compliance Checklist
— Written internship agreement signed before start date
— Internship registered under Apprentices Act if applicable
— Stipend paid on time each month
— POSH induction completed on day one
— Intern included in IC's jurisdiction
— Working hours compliant with applicable state law
— No hazardous work assigned to interns
— Structured learning plan documented and reviewed mid-internship
— Internship completion certificate issued on last day
— Intern's confidential data handled per applicable data protection law
Frequently Asked Questions
Q: Can we ask interns to sign a non-compete agreement?
A: Non-compete clauses are generally not enforceable in India for employees — and even less so for interns. Confidentiality and non-disclosure clauses are enforceable and are sufficient to protect the organisation's legitimate interests.
Q: Do we need to deduct TDS on stipends?
A: If the stipend is treated as income (which it is if it exceeds the basic exemption limit), TDS may apply. Consult your tax advisor on the applicable treatment based on the amount and nature of the stipend.
Q: What if an intern causes damage or loss during the internship?
A: Your internship agreement should include a clause on this. In practice, interns are rarely held personally liable for genuine errors — but deliberate acts or gross negligence may be a different matter. Ensure interns are adequately supervised, particularly for sensitive work.
Q: Can an intern be converted to a full-time employee at the end of the internship?
A: Yes — and this is one of the best outcomes of a well-run internship programme. Issue a fresh appointment letter for the new role. The internship period does not count toward continuous service for statutory purposes unless your policy specifically provides for this.
For ready-to-use internship agreement templates and complete HR policy documentation, visit our Stores and Services page.
Related reading: Probation Period Rules in India 2026 — What HR Must Get Right
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