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.

[skumard]

Sukanya made a right point.

Upwork should withhold tax only for what freelancer earns. Not including upwork's fee.

I am seeing 0.75% deducted for the total amount client paid (including upwork fee).

Indian tax department will calculate the total amount (including upwork fee) as taxable based on TDS remitted. It is unfair.

[disha_india]

This is valid point. Agreed.

[kochubei_valeria]

Hi Ashish,

Could you please check your Tax Information page in your Settings and make sure your PAN number is added there?

Thanks!

[kochubei_valeria]

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%.

[chauhan16]

Hi Bojan,

Is there any update for me?

Regards

Chauhan V

[g_vasilevski]

Hi Chauhan,

I`m sorry about the delay with this. Our team will reach out to you via ticket as soon as possible and will assist you further. Thank you.

[khatri-mithun]

Hi,
I worked on a fixed price contract of $100. Work was submitted and approved by the client. Payment available to me is $75.
$20 service fre and $5 is WHT.
What would be WHT of $5? I was not aware of it because while submitting the proposal upwork said that only $20 will be deducted as service fee.
Contract is still open.

Thanks!

[AleksandarD]

Hi Mithun,

I merged your post in the announcement thread where you can find more information about this.

You are referring to the withholding tax that 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.

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.

You can check this help article for more information.

Thank you.

[68e56446]

It's the TDS being cut since October began. Add your pan card or aadhaar
and it will be 0.75% starting with next payment. It will show up in your
pending payments. There's an even weird thing. When your hourly payment is
in review you'll get the WHT added to pendings before the payment is there
or in available section. So just get used to it and don't forget to add Pan
or Adhaar.

[patelsandeep1987]

Hi Alex,

Today I've updated PAN details in my account. Till now there are two transactions of 5% WHT in my transaction history. My queries are
1. Will those two transactions revert to my account and will update as 0.75% instead of 5%?
2. Will I receive future all WHT of 0.75% instead of 5%?

Kind regards