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GST for freelancers/agencies in India

kochubei_valeria
Community Member

Upwork is now collecting General Service Tax (GST) Identification Numbers for freelancers and agencies located in India. We are not currently implementing any tax collection. The GST rules in India are complex, and Upwork is currently working to determine how the GST rules apply to all Indian freelancer and agency transactions being facilitated through Upwork’s platform. At this time, we are only collecting GST ID Numbers. 

 

We have sent an email to freelancers and agencies located in India notifying them of this update. If you have a GST ID number, we ask you to click the link provided in the email to update your taxpayer identification information. Or you can input the information by going to your “User Settings” and then “Tax Information.” Once you input your taxpayer identification number, this system will confirm that we have received your number.  The system will also let you respond to indicate that you do not have a GST ID number if you are not registered.

 

If you have any questions about GST or Tax IDs, we recommend that you consult a tax advisor to determine how the law applies in your specific case.

140 Comments
VladimirG
Community Manager

Hi Ananya,

 

If you do not currently have a GST number, you may wish to consult with a trusted tax expert or advisor. Upwork cannot provide tax advice.

 

To your second question, at the present time, Upwork is not registered in India and therefore will not assess the GST on transactions there. We are only collecting GST numbers from Upwork users currently. If we as a company are required to register in India in the future and start getting assessed GST, we will let you know.

vishalmaihdwan
Community Member

Hey Anup Bhai, am not that active on upwork, but am getting on this thread after searching FIRC certificate standard Charted Bank. Am also affiliater, i recived approx 40k usd from my network, they did me Lft through Standard Charted Bank Mumbai, Recieved money through NEFT in my bank account , and i have to withdarw 1 lakh usd, am going mad over this 18% gst & after than income tax that's too much bhai , please help how to deal with this. how to save 18% gst. this is the page where i landed first - https://community.upwork.com/t5/Freelancers/FIRC-certificate-from-Upwork/td-p/376583

you or angad S please reply me & help me with best it seems u already face this & delt with

e58c8405
Community Member

Hello Valeria, 

 

Thanks for putting up this thread here. I'm a Qualified Chartered Accountant with more than 8 years of experience, also currently the most viewed writer on Quora for "Goods and Services Tax in India". I would like to provide few points to Indian Freelancers working via upwork.

 

  • Exports of Services from India is considered as a inter-state supply under GST law and thus GST registration is mandatory as soon as your turnover in Indian currency exceeds INR 20 lacs.
  • All exports are zero rated under GST, this means that GST is applicable at the rate of zero (0) percent and all compliance needs to be done as per the law including Registration & Return Filing. The purpose of making it zero rated is to promote exports as it brings foreign currency in Indian Economy.
  • Once you get yourself registered under GST and file return for work done on Upwork, though there would be no GST liability but freelancers can claim refund of GST paid on input services such as wifi bills, rent, hostings and other office supplies.
  • The compliance for freelancers include monthly filing of GSTR-3B, Quarterly filing of GSTR-1 and annual GSTR-9.
  • Freelancers and service providers can apply for “Letter of Undertaking”, this will enable them to file their GST returns without payment of tax. In case a freelancer does not have a LUT, they shall be required to first pay 18% on their export invoices and then claim a refund of it, which may take anywhere between 3–6 months to receive in bank.
  • Freelancers must also collect Foreign Inward Remittance Certificate from their bank and document it as proof of export. In case you are receiving your payment via PayPal or Payoneer, they have special facility to provide FIRC via an online request.

Have more queries on GST compliance or need assistance in your compliance, feel free to send me a direct message here and I'll be very happy to help.

 

Hope these pointers were helpful!

e58c8405
Community Member

Hello Isabelle,

 

Indian Freelancers working on upwork are mandatorily required to apply for GST Registration as soon as their receipt in a financial year exceeds INR 20 lacs. Though all the freelancers who are receiving money via a wire transfer are expemt from payment of GST, however they must file monthly GSTR3B under "without payment of GST categoty". I have written a detailed post on the compliance for Indian Freelancers under GST which you can read here.

iaabraham
Community Member

Shubham K wrote:

Hello Isabelle,

 

Indian Freelancers working on upwork are mandatorily required to apply for GST Registration as soon as their receipt in a financial year exceeds INR 20 lacs. Though all the freelancers who are receiving money via a wire transfer are expemt from payment of GST, however they must file monthly GSTR3B under "without payment of GST categoty". I have written a detailed post on the compliance for Indian Freelancers under GST which you can read here.


Thanks for your post, but I already received this same info from several other accountants. As I already stated, I am currently not required to either register for or pay GST 🙂

anishatez
Community Member

More clarification is required. I have pondered over this for long and have no time to do accounting.

In India, not all CA or Accountants have knowledge about freelancing and Upwork. They will mix it up with ebay & Amazon - it is not the same online business. Also, Upwork does not provide Tax Consultation. My Accountant is also cheating me.

 

(i) What if the transaction is above 60,00,000 INR and you are freelancing with foreign clients.

(ii) The basic idea of GST is that - when a client pays money for the service he has received, he will again get back this amount. For this, the client has to provide a GST number. There is also TDS (Tax Deducted at Source) which is applicable only in India. I have done it many times. This is how it works in India.

 

I have no clue how to pay GST and how much to pay. 18% is only applicable within India, so what will I pay or is GST really required. There is no such circular from the Government either.

e58c8405
Community Member

Hey Anish,

 

What you have mentioned is absolutely correct about the current state. However the compliance under GST has evolved over time and is now very much stabel for Service Exporters.

 

Regarding the points that you have made, I'll try to answer your queries and hope that it helps:

 

Q -  What if the transaction is above 60,00,000 INR and you are freelancing with foreign clients.

A - The only threshold which is of relevance in GST is INR 20 lacs for a service provider. Once your turnover exceeds INR 20 lacs, you are mandatorily required to register. However the current modus operandi is as such, that many of the service providers are compulsorily asked to furnish a GST number, irrespective of their turnover (such as PayPal settlement etc)

 

Now my assumption is that the amount of INR 60 lacs is coming from Section 44ADA of Income Tax Act (presumptive taxation) wherein service providers get's the benefit to claim expenses to the tune of 50% of their receipts for turnover till INR 50 lacs. If your turnover exceeds INR 50 lacs, you are required to maintain proper books of accounts and pay income tax at the slab rate applicable. However this taxation has nothing to do with GST.

 

Q - The basic idea of GST is that - when a client pays money for the service he has received, he will again get back this amount. For this, the client has to provide a GST number. There is also TDS (Tax Deducted at Source) which is applicable only in India. I have done it many times. This is how it works in India.

 

A- Please note that in all export of service cases, you are not required to pay any GST. You can either pay 18% GST on your monthly billed services and claim a refund of this amount in 6 month's time or alternatively you can apply for LUT and file your GST return without payment of any GST.

Now on your expense/purchase side, if you are also getting some of your business work done from Upwork, you will not be able to claim any input credit as no one would be charging GST here on upwork.

 

Also, please note, all you transactions here on upwork are considered as export of service (even services provided to Indian clients) because you settlement is coming from USA.

 

TDS is only expense side, so your receipts on upwork has nothing to do with your TDS compliance. For expenses incurred on upwork to avail services, you can not deduct TDS and that remains an unaddressed issue.

 

I have tried to answer to the best of my knowledge and understanding. Please let me know if my assumptions on your queries were incorrect. Happy to assist further. Thanks

shibajyoti
Community Member

1% of 6K USD  = 60 USD

 

 

saumyagwari
Community Member

Is it mandatory to provide GSTIN ( even if we don't have one) to withdraw our earnings  ?

BojanS
Community Manager

Hi Saumya,

 

If you do not currently have a GST number, you may wish to consult with a trusted tax expert or advisor. Upwork cannot provide tax advice. Please check this help article for more information.