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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
pramanik-riju
Community Member

I think you have misunderstood the point of TCS. Upwork isn't taxing you. They are just collecting a set per cent of your income to submit to the government. Even if your income falls below the threshold, these need to be paid. 
As for proof of payment, that's where Form 16A comes into play. It is linked to your Pan/Aadhar and the amount collected by Upwork shows on the form and that can be used as a rebate if your tax liabilities are lesser than what the TCS amount was.
I suggest you read more about how taxation works in our system and get a better understanding of the Rebate system.

VladimirG
Community Manager

Hi Praveen,


Thanks for your question. 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. 

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. 

VladimirG
Community Manager

 Kartik J wrote:
Hello
Can I change my PAN number on Upwork.
How will it impact my TDS (WHT) , Form 16A and 26AS.

Zahir A wrote:

Hello
Can I change my PAN number on Upwork? I need to enter aadhaar number
How will it impact my TDS (WHT)



Hi Kartik and Zahir,

We apologize about the delay in providing the information you requested. Note that we rely on the good faith of the users to provide the correct PAN. The PAN should be the account owner’s number, as that is the person that is earning income and may have an Indian tax reporting responsibility.

If you provided a PAN previously and we used that information to record transactions, we have started reporting to the government under that PAN. If you change the PAN now, we will use the new PAN number for all future transactions. The transactions that have occurred to date will be reported under the PAN that was on the account at the time.

saksena_shashank
Community Member

Dear   Members, 

Request to kindly check TRACES now .... some Upwork TDS amount deposited dated 22nd Mar  has started reflecting now .

Thanks

galaxysoftware
Community Member

Yes part deposits from Oct-05-2020 to Dec-28-2020 are available now, hope complete deductions will be refelected soon.

 

Thanks

nabhassy
Community Member

Just checked the Form 26AS, and October-December quarter amounts are updated correctly.

Thank you for your efforts.

Hope you will update the next quarter on time, as you are now familiar with the proceedings.

suganthanth
Community Member

Hi All, how to deduct TDS on payments to Non-Resident freelancers by an indian resident. Since the payment is through Gateway, i am not able to deduct any tax. Kindly elabrate me the income tax provisions and procedure to deduct tax.

NikolaS
Moderator

Hi Suganthan,

 

In general, TDS will apply to all client payments sent to Indian freelancers and agencies, with the amount of TDS to be collected determined by whether or not you have provided a PAN or Aadhaar number to Upwork.

 

  • A 0.75% tax is withheld from earnings for freelancers that provide a PAN or Aadhaar number to Upwork.
  • A 5% tax is withheld from earnings for freelancers that have not provided a PAN or Aadhaar.

 

Edited to NOTE: The withholding rate of 0.75% is effective from October 1, 2020, until March 31, 2021, and was increased to 1% effective April 1, 2021.

 

You will need to add a PAN or Aadhaar number in order to keep the withholding tax at 0.75% of your earnings, should we need to collect the tax. To enter your PAN or Aadhaar number, click here.

 

You can find more information about Indian Tax Deducted at Source in this help article

 

vikram-malik
Community Member

Hello Nikola,

 

Unfortunately, what you are saying is not proving to be accurate.

 

Specifically, the "Withholding Tax" for me is turning out to be 1% instead of 0.75%, despite having provided accurate Aadhaar/PAN details.

 

As an example, please refer to the latest payment I've received ($50) which is still in "Pending" status (I am assuming you DO have access to the records). 0.75% of that would be $0.38 while I am being charged $0.50. The same holds true for some other, recent transactions as well.

 

The difference may be marginal but it all adds up.

 

Moreover, as others have repeatedly pointed out, "Withholding Tax" should be charged on the net receivable amount and not the gross one. So, in the abovementioned instance, it should be charged on $40, after Upwork's $10 fee, in which case the "Withholding Tax" would be $0.30.

 

I would request you to please look into this and respond suitably at the earliest.

 

Thank you! 

sridhar_orion
Community Member

How do you check in TRACES? Can you please let me know the TAN of Upwork?