Tax, GST and invoice

[ss_architect]

I'm a resident of India. Do I need to pay GST for earnings from my agency account even I get paid from clients outside of India?

And for invoice, Do I recieve in INR or USD?

Tax, GST and invoice  

[759e32fa · Accepted solution]

Hi Shivaprasad,

Thank you for reaching out to us. If you do not currently have a GST number, you may wish to consult with a trusted tax expert or advisor as Upwork cannot provide tax advice. For more information, please refer to this help article.

[ss_architect]

Hi Annie,

Thank you for the reply.  I do have the GST number, but wan't to know weather UPwork will deduct the GST or not. If I earn from Foregin clients and in what currency UPwork provides me Invoice?

Tax, GST and invoice 

[kochubei_valeria]

Shivaprasad,

Please, note that at this time, Upwork does not assess or collect GST on transactions. I encourage you to check the article AJ shared earlier for more information. Unfortunately, we are unable to provide specific tax advise and recommend that you check with a local tax adviser.

[4fc4e354]

Hi Shivaprasad,

Through upwork either you are providing services to your Indian client or foreign client.If you are providing services through upwork to a foreign client and receiving the money in convertible foreign exchange(in $) (Please take identity card of person to whom you are providing services as a proof to identify location of your consumer that is he/she is from outside India) then it amounts to export of services. In case of export of services , Government has provided two options:

A) To pay GST @18% and claim refund of the same.

B) Comply conditions mentioned in LAW and do not pay GST on your export turnover.

In my opinion, second option is better.

In case you provide services to a client residing in India ,through upwork, then it does not amount to export of services and normal provision of GST would apply and accordingly either Pay 18% from your pocket or while entering into contract with your consumer the total contract value should be contract value +18% GST.

I hope that I have solved your query and in case you are still not satisfied you can drop me a message on upwork.

Regards

CA Shrey Salecha

[95087c0e]

Hi Shrey,

Had a GST related question. 

I am new to Upwork. My annual income is to be below the 20 lac threshold due to which I thought I would not have to apply for a GST id.  But reading through one of the documents in upwork I saw this:

"According to India’s Goods and Services Tax (GST) laws, freelancing services are categorized under database and online information."

Going by this does it mean that the 20 Lac threshold does not matter and that work done through Upwork comes under OIDAR due to which I will have to file for GST id?  I opened a separate thread on this earlier.  I think I should probably have replied to this one....not sure. Thanks.

[4fc4e354]

As per CGST Act,2017, freelancing services do not fall under definiton of OIDAR services.Hence, limit of turnover of Rs.20 lakh shall apply for GST registration.

 I hope that I have solved your query and in case you are still not satisfied you can drop me a message on upwork.

Regards

CA Shrey Salecha

[95087c0e]

Thank you for clarifying, fully understand.  However a follow-up scenario. 

Do we have to pay reverse GST on the 10% service fee that Upwork charges, and due to which we have to apply for GST under Section24? 

Once again annual turnover is below the 20 lakhs limit.

[4fc4e354]

In my opinion, the service provided by the Upworkis in the nature of intermediary services.  And as per the GST law, the place of supply in the case of intermediary services shall be the location of the supplier of intermediary services.
Where a platform does not have its location in India, the place of supply will be outside India, and such services will not be covered under the RCM.

[4fc4e354]

Burning question whether GST registration is required or not

I have stated in many of my post and answer to members queries that a person is mandatorily to get registered within 30 days when aggregate turnover exceeds Rs.20 lakh (Rs.10 Lakh for Manipur, Mizoram, Nagaland, and Tripura).

What does aggregate turnover means?

Aggregate turnover means

• Taxable supplies
• Exempt Supplies
• Exports
• Inter-state supplies

Of persons having same PAN but does not include

CGST, SGST, IGST, UTGST.

I am pretty sure no one had understood the above definition.

 In simple layman terms we can calculate aggregate turnover by aggregating banking receipts and cash receipts including interest (for limited purpose we include interest just to calculate turnover but GST is not leviable on such interest).

This was till I did not had conversation with Upwork tax team.

However, when I had discussion with Upwork tax team I came to know about their status and as per conversation they are they are non-resident OIDAR service provider located in non-taxable territory.

In case of OIDAR services provided by a person located in non-taxable territory, place of supply is location of recipient of services and as per above provisions Upwork would be a person located in non-taxable territory provided OIDAR services and location of recipient (freelancer) is in India. It would amount to import of services and any amount paid for import of services (in case of Upwork service fee) would attract tax to be paid under reverse charge mechanism. For paying tax under reverse charge compulsory GST registration is required irrespective of turnover (even if less than Rs.20 lakh and Rs.10 lakh in case of specified states).

Now what is reverse charge?

Reverse charge means a charge other than normal charge

Now what is normal charge

Under normal charge, seller collect GST and pays to government and claim input tax credit (in layman terms rebate of tax paid to government). Reverse charge is opposite of normal charge and buyer pays tax and claims input tax credit.

What if GST registration is not taken?

Penalty for non-compliance is Rs.20000 or tax evaded whichever is higher.

Secondly, I have seen that many freelancers are not furnishing income tax returns I would request to those freelancers to furnish ITRs and claim TDS refund if no tax liability or adjust it against tax liability otherwise government may send notice in future.

I hope that I have solved query. I request to group member to post the query in the group so that all the queries shall be solved here itself

[db26b815]

It is based on you earning there is certain limit on registration of gst as well as for taxable turnover