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GST for freelancers/agencies in India

anupshinde17
Active Member
Anup S Member Since: May 3, 2016
91 of 105

(1) In an ideal situation the contract would stand like - you work for Upwork (export of your services), Upwork pays you and client hires Upwork.

 

(2) However, if Upwork is summoned into a legal situation - it will most likely deny responsibility and say it is just an intermediary and only connects you and the client. Then the contract is between you and the client. Chances that authorities legally engage with Upwork are low (but not impossible) and then you are in a weird situation and will be blamed for tax evasion. 

 

Based on (2), you are liable to pay GST if you and your client are Indian. But based on (2), you will have a hard time consolidating your Upwork income in INR. In that way you tend to lose upto 40-45% money in the transaction and yet not have a clear money trail in INR.

 

Please consult a good accountant or firm who will support you when notices are served by authorities many years later.

 

My two cents when dealing with such situations:
1. Try to avoid such clients because monetarily it does not make sense losing a huge percentage to do the legal/safe thing. The compliances for clients are also problematic when sums are large.

 

2. If you cannot avoid, pay the GST. Even if queries are raised later, at least authorities cannot blame you for tax evasion. However, with slightly larger sums, this is not a simple thing either and you and your client could be blamed for bad invoicing

 

For a moment, just imagine having to defend yourself 4-8 years down the line against the tax authorities and the mental harrassment it will cause you.

 

EDIT: Even for freelancers who are not required to be GST registered now, be aware that if you register for GST in future the GST authorities do dig out transactions from many years in the past and have a right to question your exemptions.

shahyash84
Active Member
Yash S Member Since: May 9, 2020
92 of 105
Hi Anup, thanks for the revert. I agree to both the options but I think second option is better since I have always abided by law throughout my life till now and would like to continue. I am going to pay GST on the complete amount (Prior to deduction by Upwork) by assuming that the gross amount includes GST and will also issue invoice with GST to the client hence I don't think authority will have any issue i.e. In other words for this purpose I am treating upwork like Paypal who is collecting money on behalf of me and deducting charges for that collection hence that doesn't have any effect on GST payment amount. This is only going to give loss to me hence I agree that working with Indian clients is a loss making proposition. I have learnt the lesson to ask client Upfront GST over and above the contract amount before proceeding
sridhar_orion
Ace Contributor
Sridhar J Member Since: Sep 26, 2015
93 of 105

Hi,

 

I recently had a call with my bank (HDFC), as they are updating their system, they enquired more about the exact services we offer. During the conversation, they also enquired if we could produce any work relation document between Upwork and us. Similar to Certificate of Earnings.

 

As we are an agency, we do not have the option to download certification of earnings.

 

While searching the Upwork community, I came across this thread https://community.upwork.com/t5/Freelancers/India-GST/td-p/361564/page/15. And there it has mentioned that Upwork will assist by providing signing the confirmation of services document.

 

I had a chat with the Upwork customer care regarding this, but they said that they do not provide any such document and the confirmation of services document is only provided for EU nations.

 

I would like to if any freelancer or agency has come across this issue. Are they any supportive documents that can be provided by Upwork would prove that we provide our service in Upwork.

egaruth
Moderator
Nikola S Moderator Member Since: Jul 2, 2020
94 of 105

Hi Sridhar,

 

I am sorry for the inconvenience this has caused. I shared your report with our team and one of our agents already reached out to you via a support ticket to assist you further. You can access your ticket on this page.

 

Thank you,

~ Nikola

Untitled
sridhar_orion
Ace Contributor
Sridhar J Member Since: Sep 26, 2015
95 of 105

Nikola,

 

Thanks for the timely response and I really appreciate it. I have received necessary information via support ticket and I will follow up with the agent

 

Thanks,

Sridhar

work_connect
Active Member
Dipika A Member Since: Aug 20, 2018
96 of 105
Hi Sridhar, did you received the proper documents from. Upwork?
sridhar_orion
Ace Contributor
Sridhar J Member Since: Sep 26, 2015
97 of 105

Dipika,

 

I recieved an user agreement digitally signed. But the bank did not ask for any other document after I explained the complete business model.

work_connect
Active Member
Dipika A Member Since: Aug 20, 2018
98 of 105
OK. Thanks. Also are you paying GST under reverse charge for Upwork Fees.
sridhar_orion
Ace Contributor
Sridhar J Member Since: Sep 26, 2015
99 of 105

Dipika,

 

I'm not very sure about the reverse charges. I have registered for GST and have taken LUT. 

work_connect
Active Member
Dipika A Member Since: Aug 20, 2018
100 of 105
I mean the after Oct (since TDS is getting deducted) how are you dealing
with the Fees which Upwork charges as we have to show invoice at gross value

So are you paying GST (Under reverse charge) on the Upwork fees.