GST for freelancers/agencies in India

[Valeria K]

Hi Rachana,

If all freelancer's contracts are under the agency and all payments are made to the agency account, then the agency's GST number should be added?

[Vijay S]

Is Upwork confirming that freelancers must submit GST number (GSTIN) to continue working here? More clarity on this issue would be helpful because once we apply and get GSTIN we need to submit 3 returns every month. That's a costly, time consuming and unnecessary process for most of us.

[Ravindra B]

On receiving the recent GST-related email from Upwork, I talked to my CA.

According to him, I am exempt from GST based on my income.

However, if Upwork has received intimation from GOI to collect 1% from all Indian freelancers (irrespective of the amount of their earning at Upwork), then that is how it will be.

I do not have a GST number right now, as I was exempt based on my income.

I am awaiting clarification whether registering for GST and proving the GST number to Upwork is mandatory.

[Lokender Y]

I think upwork will be rolling back this decision because it doesn't make any sense.

If they want to collect GST, they can do so only on Membership connects and the 20% / 10% / 5% commission charged by them from freelancers. 

Collecting 1% GST on every payment is not a rule anywhere in India or any part of the world. It is upto the freelancer to file his income tax returns based on his income tax slab under ITR -4 (SUGAM) in India.

I request upwork to consider all the above facts and get it touch with a local tax consultant like ClearTax themselves in India before making any such changes.

[Avery O]

Hi Lokender, 

Thank you for sharing your thoughts about this with us. 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.

Upwork is currently working with its tax advisors to determine under what circumstances GST must be collected on transactions between Upwork and its users.

[Ravindra B]

---

Avery O wrote:

Hi Lokender, 

We are only collecting GST numbers from Upwork users currently. 

---

Thank you, Avery.

Is it mandatory to provide a GST number?
I don't have a GST number right now, and I will have to apply for one.

[Anup S]

Is Upwork also incorporating/registering itself in India? If not, why do you have to charge GST at all?

The 1% GST is applicable only under composition scheme which is open for manufacturers, restaurants and traders whose turnover does not exceed Rs 1.5 crore.

Pretty sure Upwork's revenue is much more than that for the "sliding fee charges" and "other purchases" made by freelancers. That implies Upwork cannot apply 1% rate.

The other possible rates are "5%, 12%, 18% and 28%". Clearly the services from Upwork are not in the 5% slab. That leaves either 12,18 or 28%. Most likely the applicable rate for Upwork services will be an IGST(Integrated-GST) at 18%.

I believe the following should be expected by a freelancer if GST is charged:

1. Upwork sends a GST invoice to the freelancers (which has to be INR currency). And this has to mention the GST rate charged
2. Upwork must have a valid GST number mentioned in the invoice and a valid GST certificate shared with freelancers.
3. I think - Upwork can charge GST only on services provided to freelancers. i.e. GST only on the sliding-fee/commission (not the entire payment), and other purchases from freelancers.

For freelancers located in India:
- Do not register for GST if you are not liable/required to register based on the current situation. Registration is simple, but GST filing and documentation is a pain *** and will put a hole in your pocket (expect anywhere between 12K to 35K INR annual costs for an accountant)

P.S: It is good to see that Upwork is streamlining the legal aspects. Upwork's Local Bank Tranfer (in India) puts it in the pseudo-legal range and makes Upwork a local money-broker liable to register for GST and could be accidentally violating FEMA (because of no FIRCs). Upwork might want to look into that aspect too.

[Pravin S]

Good thread, I checked with my CA and the GST limit is applicable for anyone with income >20L on services

Note: 40L is for good sold, not services

so if you are liable, do register and give your number to upwork, otherwise we can wait and watch what happens

[Sridhar J]

I did spoke to my CA and as far as I know, you need a GST no if you do interstate service business even if your turnover is less than 20 lacs.  As most of the business we do in Upwork is for foriegn clients, you need to register for GST, even if your turnover is less than 20 lacs.  As most of the clinets we serve are from foreign countires, you should only use Wire Transfer to withdraw money from Upwork. When you use wire transfer, you get FIRC as a proof that you are remiting your income in USD.

If you are using LFT to withdraw money from your Upwork account, there is very little chance that you can prove your income is for export services.  And you are liable to pay GST in 18% or 28% slab based on the service you provide.

Now, when we provide our GST number to Upwork and as they mention, if they deduct 1% from our billing and deposit to Indian government as GST collection with our GST numbers, we will be considered as people who are  evading GST and may be fined.

I request Upwork to  explain this in detail as this move can possibly make several freelancers as tax evaders.

[Anup S]

---

Sridhar J wrote:

I did spoke to my CA and as far as I know, you need a GST no if you do interstate service business even if your turnover is less than 20 lacs. 

---

@Sridhar J , No offense, but I think you need to fire your CA. Did you speak with him/her recently? Either you CA does not know about the policy changes from 2 years ago - or is just unethical and trying to make money with unnecessary documentation

This is from an official source On 6th October, 2017

"It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. "

Official Source: http://www.cbic.gov.in/resources//htdocs-cbec/gst/20171006_PressRelease_22ndGSTCMeeting.pdf

It was true when GST was first introduced, but within approx 6-7 months the policy change was known and clear to most CAs

Please do cite the source of information if you find something contradictory to the above.