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Indian TDS Tax Withholding on Upwork Earnings

lenaellis
Community Member

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.



 

492 Comments
VladimirG
Community Manager

Hi Sanjay, thanks for the questions!

 

1. 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.

 

2. Upwork will withhold tax on all payments made on or after October 1, 2020. The law requires withholding based on the date of payments made. 

The reporting is done quarterly, so a statement will be provided to the freelancer every three months with the details of the tax withheld on their behalf.

 

3. & 4. No on both of these questions. 

amitdmsp
Community Member

We are an agency and we have 10+ members working under agency, Do I need to provide the agency's PAN/Adhar details only or every member's PAN/Adhar details?

synsoftglobal
Community Member
Thank you for your response.

Does this also means that agency will have to pay Tax (TDS) on the
commission/fees charged by upwork and deposit to the government in addition
to the TDS deducted by Upwork as the commision forms the part of our gross
income and then deducted by upwork.

As Upwork does not have Indian PAN number the TDS on commission paid by
agency will be at the highest rate @20% and to be paid by agency from his
pocket. This will be an additional cost

Please advise.
VladimirG
Community Manager

Hi Amit and Sanjay,

 

Thanks for your questions. To clarify the process, if a Freelancer is working on a contract under an Agency, the payments go to the Agency's account. So the tax will be withheld on that payment, and remitted in the name (and using the PAN) of the Agency.

To Amit's question, only one PAN/Aadhaar can be added.

Sanjay, please note that payments for Upwork's services are not subject to Indian withholding tax because Upwork's services are performed outside of India, and thus fall under rules in the US-India tax treaty. The treaty relieves the freelancers of any withholding obligation, and instead, Upwork is required to calculate tax on these services and remit directly to the Indian government (under the recently enacted Equalisation Levy).

synsoftglobal
Community Member
thanks for your reply, appreciated.
rahulbangar786
Community Member

But I still see notification from Upwork where it's saying it will hold 5% if we have not given tax ID.

anshugautamgct
Community Member

I would like to get some information and clarity on upwork’s new process of “Income Tax Identification”.

If I’m working under an Indian Agency and my profile is with my name & details under an Agency, and all payments are made from Manager ID(for buying connects,etc.), then do I need to share my own PAN/Aadhar details or can we share Agency Pan/Aadhar details(Manager details under which are all other ID’s) for Income Tax Identification Process.

 

BojanS
Community Manager

Hi Anshu,

 

I've merged your post with this thread where the same question was already addressed. Please check Vladimir's response above and feel free to reach back to us if you have any additional questions.

 

Thank you!

engineersons_div
Community Member
I am a director of private limited company and want to work as an individual freelancer on upwork but I want all payment to be done in my company account?
My company name is different than my legal name.
Now few things i want to ask is :
1. Can I fill Company Pan no. In Pan no. Field?
2. Can I use my company current account to receive payment, if yes then what to write in first name, last name and name on account?
3. What to write in legal name of W-8BEN? Should I write my name or company name?
synsoftglobal
Community Member

Hi

 

Thanks for the response that -

 payments for Upwork's services are not subject to Indian withholding tax because Upwork's services are performed outside of India, and thus fall under rules in the US-India tax treaty. The treaty relieves the freelancers of any withholding obligation, and instead, Upwork is required to calculate tax on these services and remit directly to the Indian government (under the recently enacted Equalisation Levy).

 

It will be great if  Upwork can provide this information officially to us in writing (on their official letter head) for our records and submission (if needed) to Tax Authorities and our Tax consultants . 

 

Thanks


Sanjay