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GST for freelancers/agencies in India

iaabraham
Community Guru
Isabelle Anne A Member Since: May 19, 2014
71 of 120

Vladimir G wrote:

Hi Amit,

 

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. You can find more information in the previous conversation on this announcement thread and in this Help article.


Hi Vladimir, I am in the process of setting up in India, and have in fact consulted several Indian tax professionals who have stated that I do not have to pay or register for GST. I suspect the same applies to many Indian freelancers here.

 

Now the question that many of us are asking is: Since we are not legally required to have a GST number, can we safely continue without one on Upwork? What is Upwork going to do to freelancers who don't provide their GST number (because they don't have to)? Or is this something that Upwork is still in the process of figuring out?

 

Some clarification is much needed, even if it's just: "Sorry, we actually don't have the answers to your questions. We're working on it."

 

Either way, we need to know.

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
72 of 120

Hi Isabelle,

 

I apologize but I won't be able to advise on your question. Upwork is currently working with its tax advisors to determine under what circumstances GST must be collected on transactions between Upwork and its users. If it is determined that tax is to be collected, we will contact our users in India to provide an explanation of what transactions will be assessed and the date any collection will start.

Untitled
iaabraham
Community Guru
Isabelle Anne A Member Since: May 19, 2014
73 of 120

Well I guess that's an honest answer. Thanks anyway, I know you're just relaying what the team tells you.

e58c8405
Ace Contributor
Shubham K Member Since: Aug 18, 2017
74 of 120

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 Guru
Isabelle Anne A Member Since: May 19, 2014
75 of 120

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 Smiley Happy

e58c8405
Ace Contributor
Shubham K Member Since: Aug 18, 2017
76 of 120

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!

anishatez
Active Member
Anish D Member Since: Jan 16, 2018
77 of 120

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
Ace Contributor
Shubham K Member Since: Aug 18, 2017
78 of 120

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

lokeshyadav2909
Active Member
Lokender Y Member Since: Aug 28, 2015
79 of 120

I have been filing ITR on my own from last 3 years.

Simply file ITR4 under Section 44ADA with Presumptive income. This is valid if your yearly gross payment is less than 50 lakh, which most of the freelancers have.

 

For example: You have earned 20 lakhs from freelancing in the whole year from April to March.

You need to pay tax only on 50% of the amount and rest is counted as your expense. No proof required.

 

Therefore, total tax will be on 20 lakh that will come out to be:

5% till 5 lakh (Rs12,500 tax)

20% between 5 to 10 Lakh (Rs 1Lakh tax)

30% above 10 Lakhs. (Rs 0)

 

Total tax payable: 1,12,500  + cess.. 

 

That's all. 

ranbeerm
Active Member
Ranbeer M Member Since: Nov 19, 2017
80 of 120

Hi Shubham,

 

Thanks for the clarification. This is good from a freelancer point of view.

 

Can you clarify following:

 

1. If I'm a buyer and my seller is non-Indian freelancer, how is GST compliance in that case? My CA told me: 18% GST on reverse charge and then TDS 10.4%(incase pan of seller is available)/15%( if pan is not available) TDS and pay. I'm not sure.

 

2. What about fees Upwork (service fee) is charging? Ideally there should be GST paid by Upwork and TDS deducted by me for Upwork service fee.

 

Let me know if there is any clarity from GST/TDS laws perspective.

 

-Ranbeer