Question 4-10c) If an employer provides a scholarship to an employee who is on leave of absence, is that scholarship taxable? Solution They are non taxable if scholarship paid to a student at an institute for the purpose of study and the amount received is used for to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution. if scholarship is paid by an employer to an employee it will be included in the gross total income and will be taxable.