Indian TDS Tax Withholding on Upwork Earnings

[lenaellis]

Starting October 1st, Upwork will begin withholding Tax Deducted at Source, TDS, from payments to freelancers and agencies located in India as part of a new tax law enforced by the Indian government.

As part of our continued efforts to remain compliant with tax laws in India, we are asking that our customers in India provide their Income Tax Identification number in the “Tax Info” section under “Settings”. For purposes of TDS withholding, the Indian government will accept either a Permanent Account Number (PAN) or an Aadhaar number. Please be sure to use the correct format for your PAN or Aadhaar number as defined by the Indian government:

• PAN is a 10-digit alphanumeric entry, i.e., A A A A A # # # # A
  # = Numeric   A = Alphabetic 

• Aadhaar is a 12-digit numeric entry

For those freelancers and agencies that have provided a PAN or an Aadhaar number:

We are required to withhold 0.75% of all your payments, starting with the first dollar you earn as of October 1, 2020, and forward it to the Indian government. The rate is scheduled to increase to 1% on April 1, 2021.

For those freelancers and agencies that have not provided a PAN or an Aadhaar number:

We will be required to withhold 5% of all your Upwork earnings and forward it to the Indian government. You will be able to claim a tax credit or refund from the Indian government should you pay more taxes than required. 

You will need to add a PAN or Aadhaar number in order to keep the withholding tax at .75% of your earnings.  Click here to Add Income Tax Identification.

To learn more about Indian TDS, click here. 

Let us know if you have any questions.

[AleksandarD]

Hi Aman,

You should be able to withdraw funds, but please note that the listed name on the account must match your verified name on Upwork. You can check out this help article for more information.

Thank you.

[amanagrawal9]

Dear Aleksandar D,

I hope do you understand by HUF account?

**Edited for community guidelines*

Can you please refer above link and help me that I can use a HUF account with upwork or not?

Thanks,

Aman

[BojanS]

Hi Aman,

I checked this and see that you've posted this question on your existing ticket with our team. Please allow time for our team to respond and update the ticket with the information you're looking for. If you have any additional questions please post them on that ticket for further assistance.

Thank you for your patience!

[bedisahil]

Hi Goran, I file as a company in India. I want to use Company name under Legal Busines Name of W8-Ben, and PAN Card section. Could you please advise if that is okay ? Thanks

[JoanneP]

Hi Sahil,

I'll go ahead and ask our team about this. I'll update you here once I have more information. Thank you. 

[e54e8d4e]

Would this 0.75% withholding tax  be charged at the time of withdrawals or would this be charged on every invoice ? 

[JoanneP]

Hi Ashutosh,

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

[amansingh1985]

Hi Joanne,

This means tax will be deducted on the 20% Upwork fee as well. Please verify understanding as it is important for reporting purposes. 

If I complete a fixed price job of $500 for a new client and Upwork deducts $100 (20% of the contract value) as an Upwork fee. In this case, Upwork will report my earnings as $500 and will deduct 0.75% on this amount, which is $3.75 instead of the actual amount I receive, which is $400 and TDS should have been $3.00 on this amount.

So, effectively I will end up paying tax on 20% Upwork fee as well which is taken off the top. 

Aman

[JoanneP]

Hi Aman,

Tax Deducted at Source (TDS) is a means of collecting income tax in India by requiring businesses making payments in India to remit a portion of that payment directly to the Indian government. A law adopted in March 2020 requires foreign e-commerce operators, like Upwork, to begin collecting TDS on payments to service providers in India starting October 1, 2020. The amount of tax withheld is matched to the service provider by using their Permanent Account Number (PAN) or the Aadhaar number. 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.

[iamshahzeb]

This put's so much pressure on freelancer's.

Already we are losing jobs due to COVID-19 on top of that every 10$ we earn upwork keeps 2$ and then 1.5$ for only 10 connects then 0.99$ to transefer to the bank 

and now 0.75% which is supposed to increase to 1% in next year.

I agree that you're following just the guidlines of Govt. Atleast you can do it to wave off the transfer cost or lower the 20% comission. Providing free connects will not solve the problem as you might have already gussed then people will use it carelessly. But please don't put more pressure on us. It's not just about just 0.75% it's about the edge upto which we are loaded. you have the data with you, you know how many of us earn's (actuall bank trnsferred) more then 200$ per month . Please do somthing.