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Re: Indian TDS Tax Withholding on Upwork Earnings

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Ace Contributor
Joy Esther J Member Since: Feb 13, 2017
31 of 125

Hello there,

 

If you can explain the WHT calculation, it will be great. Suddenly find the deduction under WHT. 

 

Please explain. 

 

Regards

 

Joy

 

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Moderator
Bojan S Moderator Member Since: Mar 9, 2018
32 of 125

Hi Joy Esther,

 

The amount of tax we are required to withhold is dependent upon whether or not you have a valid PAN or Aadhaar number on file with Upwork:  

  • For Upwork users that have a PAN or Aadhaar on file, we are required to withhold 0.75% of client payments to users. 

  • For Upwork users that do not have a PAN or Aadhaar on file, we are required to withhold 5.0% of client payments to users.

The withholding tax is calculated based on the gross amount that the user invoices their client, so it is calculated prior to freelancer service fees or any other fees that may reduce the amount credited to the user’s account. You can check this help article for more information. 

 

Thank you!


~ Bojan
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Active Member
Aarti C Member Since: Apr 27, 2019
33 of 125

Hello Team,

 

I can see the tax was deducted in my account of the 5% it's wrong you have to deduct of 0.75% because i already updated my Aadhar number in my account.

 

Please check asap do the needful.

 

Please see attached snapshot for your refrence.

 

Thanks.

 

**Edited for community guidelines**

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Active Member
Aarti C Member Since: Apr 27, 2019
34 of 125

Hello Team,

 

I did mailed you two times about tax withholding but i didn't get any response from your side.my question was why the upwork deduct 5 percent taxes? i have already updated my Aadhar number. than why it's happen to deduct  5 percent tax? as per upwork rules upwork should deduct only 0.75 percent.

 

Can you plaese check asap?

 

Thanks

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Moderator
Aleksandar D Moderator Member Since: Mar 23, 2019
35 of 125

Hi Aarti,

 

I'm sorry for the delay. We are checking with the team and will update you as soon as we have more information.


Thank you for your patience.

~ Aleksandar
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Moderator
Valeria K Moderator Member Since: Mar 6, 2014
36 of 125

Aarti, Gautam and Gagandeep,


We appreciate your patience while we were checking on this. The team confirmed that the transactions you were referring to had happened before PAN/Aadhar numbers were added to your accounts. Therefore, it was withheld at 5% rate. Going forward you should see the tax being withheld at 0.75%.

~ Valeria
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Ace Contributor
Nitin Kumar S Member Since: Jun 9, 2014
37 of 125

Another question for the Upwork legal team. The government of India has clearly stated that TDS should NOT be deducted if the gross amount doesn't exceed 500,000 INR. I don't see any mention from Upwork regarding this. Kindly clarify how are you going to ensure this?Official clause of Income Tax Department, IndiaOfficial clause of Income Tax Department, India

Moderator
Vladimir G Moderator Member Since: Oct 31, 2014
38 of 125

Hi Nitin,

 

Thanks for your question. To avoid payment and collection difficulties as well as exposures to penalties and interest, Upwork has been advised to withhold tax on all payments to users. You will be able to claim a tax credit or refund from the Indian government should you pay more taxes than required.

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Ace Contributor
Nitin Kumar S Member Since: Jun 9, 2014
39 of 125

 


Vladimir G wrote:

Hi Nitin,

 

Thanks for your question. To avoid payment and collection difficulties as well as exposures to penalties and interest, Upwork has been advised to withhold tax on all payments to users. You will be able to claim a tax credit or refund from the Indian government should you pay more taxes than required.



Thanks for the clarification, Vladimir. That's fine for now. However in the long run, I wish Upwork can put efforts (consult with tax experts to find a solution where you deduct TDS as per the exemptions provided in the law). 

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Community Guru
Prachi T Member Since: Nov 4, 2017
40 of 125

Nitin Kumar S wrote:


However in the long run, I wish Upwork can put efforts (consult with tax experts to find a solution where you deduct TDS as per the exemptions provided in the law). 


This cannot happen. There is no way Upwork can figure out what a freelancer's total annual earnings are. Upwork is not the sole source of income for many freelancers.

 

The only solution here is to file for tax returns if your total annual income exempts you from paying income tax. 

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