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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
keyur2020
Community Member

 Hi All ,

For example, today on 11th Nov i received a payment , upwork has deducted the TDS from the payment and shown in USD to agency transaction history.

 

For Upwork quarterly statement which they will issue to calculate quarterly TDS amount , that TDS will be calculated in INR based on USD to INR rate as on 11th Nov? OR the rate while making the accumulated statement at the end of the quarter?

 

Please help.

VladimirG
Community Manager

 Hi Keyur,

 

Thanks for posting this detailed and valid question. I'm checking with my team and will provide an update as soon as possible.

shivranjan77
Community Member

Then upwork must decrease service fee from 20% to 10%.  It's so unfair if this continues people will surely look at a different platform.

BojanS
Community Manager

Hi Shivranjan,

 

Freelancers are charged a sliding fee based on their lifetime billings with each client (across all contracts they've ever had with that client's company). Once they have earned $500 with one client their fee will be reduced to 10%. To learn more about our freelancer's fees check out this guide.

 

Thank you!

nabhassy
Community Member

The Website of Income tax department India shows that no deduction shall be made if  the gross amount during the previous year does not exceed five lakh rupees and PAN information is submitted.

 

My gross amount during the previous year is less than INR 5,00,000 and PAN is given.

But TDS is still deducted. 

Please verify.

 

This is the url of Section 194 - O.   of Income tax department

 

https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia...

 

This is the relevant portion from the Website.

 

No deduction under sub-section (1) shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of an e-commerce participant, being an individual or Hindu undivided family, where the gross amount of such sale or services or both during the previous year does not exceed five lakh rupees and such e-commerce participant has furnished his Permanent Account Number or Aadhaar number to the e-commerce operator.

 

JoanneP
Moderator

Hi Anil,

 

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. Since we cannot offer specific tax advice, we suggest you reach out to a trusted tax expert or advisor to learn more about Indian TDS and your tax obligations. 

nabhassy
Community Member

Hi Joanne, 

 

 

I am writing this after consulting with tax expert. 

Please read my earlier post in detail.

The Income tax department website, clearly  states that no deduction shall be made if  the gross amount during the previous year does not exceed five lakh rupees.

 

https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia...

 

If you google “section 194 O”, you can see all websites showing this limit of 5,00,000. 

 

People working in similar platforms told me that they are deducted only if their amount is above INR 5,00,000.  

nabhassy
Community Member

Hi Abinadab,

 

I am writing this after consulting a Tax expert.

Income Tax Department of India is not asking Upwrork to calculate freelancer's total earnings. 

What it mentions is the total amount paid by Upwork only. It is clearly stated on their website.

 

https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia...

 

Getting the money now and after 1 year are not same. 

What matters is the law. If the law says you should deduct, Upwork should deduct, otherwise not.

Please check with your legal team.

 

People working in similar platforms told me that they are deducted only if their amount is above INR 5,00,000.  I can provide proof of the email my friend got from another Job site.

nabhassy
Community Member

Getting the money now and after 1 year are not same. 

What matters is the law. If the law says you should deduct, Upwork should deduct, otherwise not.

 

People working in similar platforms told me that they are deducted only if their amount is above INR 5,00,000. 

 

 


Nitin Kumar S wrote:

Prachi T wrote:

Tax Deduction at Source is very common outside Upwork, too. Most companies that hire contractors, deduct tax at source and provide the tax certificate. This is one way the government reduces the chances of tax evasion.

 

I don't see this as a problem. It's only 0.75%. That is probably much less than the actual IT most freelancers would pay once they declare their annual earnings.


Yep filing ITR or TDS deduction is not a problem at all. Vladimir has answered the specific questions I had on the incoming changes on Upwork.

 

My only followup to you was why do you think there is a clause which you suggest can't be implemented at all in reality


 

ratnamraj
Community Member

 

I do not understand for whom I am working for upwork? or  For Indian Govt?

.

why i need to pay this much percentage  20% upwork commission,

why I need to pay 0.75% TDS,

why I need to pay for connects $1.5/10 connects,

and again why I need to pay for every withdrawal $0.99

this is so ufair upwork should reduce the commission fee they have imposed, or should provide free monthly connects.