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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
pankajgera1314
Community Member

Hi,

 

Now the Upwork is collecting TCS/TDS. I am registered in GST. As far as I know, if TDS is collected then Indian Government considers that service is provided in India and if service is provided in India then do we have to pay 18% of tax on the Upwork Income as per GST regulations?

 

Thanks!

keyur2020
Community Member

Hi Vladmir , Have you got any chance to come back with answer on query I raised?

 

 

VladimirG
Community Manager

Keyur P wrote:

 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.


Hi Keyur,

 

As a follow-up to the question you raised regarding the applied rate, I can confirm we will be using the India Bank FX rate on the date prior to the transaction date to convert the transaction for reporting.

 

keyur2020
Community Member

Hi , I am registered under Indian GST and have GSTIN.

As we know from 1st Oct,2020 Upwork charging TDS on Gross amount client pays.

Also we are paying service fees in USD and get separate invoice from transaction history section , do we need to pay GST on Service fees and membership fees paid by us to Upwork?

 

Before TDS , accounting was done as net off from what client pays and what we pay to upwork.

Example:

Before 1st Oct,2020 if client pays $100 , Upwork deduct $20 and we book revenue of $80.

 

Now after 1st Oct 2020 , Upwork charges TDS on Gross amount which is $100 that means , Indian Govt will get the reporting of income from Upwork as Mr. X was paid $100 and for that , TDS was charged $0.75.

 

Based on what upwork will show to Indian Govt as our turnover would be $100 coz they have deducted TDS on that. If we net off the charges paid on upwork then our turn over would be $80 which will be a mismatch in records. So if we show $100 as our turnover and shows $20 paid to upwork as Fees , it should be considered as import of services and will be liable to pay 18% GST on the same.

 

This is my understanding. Can you anyone please help if this accounting is correct or not?

sukanyapandiaraj
Community Member
Can the Upwork team please put together a clear and bullet point response
to this to avoid any confusion? Will Upwork give us a quarterly or such
consolidated statement which will clearly show the invoice amount, Upwork
fees, the TDS etc? Or is there already such an option and may be I am
ignorant. Please clarify.
joyjebaraj
Community Member

Hello there,

 

For from Oct '20, the WHT is deducted by Upwork. Would like to know as under which section it will be remitted to Govt of India? Is it 194 J or 194 C or 192 ?? Kindly confirm ASAP. 

 

Regards

Joy

LuiggiR
Moderator

Hi Joy,

 

I'd suggest that you contact your local tax advisor since we will not be able to assist you with this. You may check this help article for more information.

 

Thank you.

codemenow
Community Member

Hi Vladimir,

 

Can you please also check when it would show on our tax credit?

I logged in to the governments website and under TDS, it doesn't show any amount from upwork.

 

Thanks

BojanS
Community Manager

Thanks for your question, Mohit.

 

We've been advised that the reporting is done quarterly. So a statement will be provided to you every three months. 

shimprui
Community Member

Hi,

 

I forgot to add my PAN number or Aadhaar number before and Upwork is withholding 5% of my earnings of December. So far it has withhold 5% of each milestones. Just today, I've added my PAN number. I just have few questions:

1) Will Upwork still withhold 5% of my earnings going foward?

2) Since I've added my PAN number now, will Upwork refund the difference of it withholds, that is 5%, and withhold only $0.75%?

3) So far, Upwork has withhold 5% of each milestone client has released, and I still have one more milestone to be released by client, my question is: since client hasn't released this one last milestone, will Upwork withhold 5% when he released the payment after I've my PAN number?

 

Your help is much appreciated!!

 

Thanks,

Jesi