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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
jasleen12
Community Member

How much charges are deducted from my earnings, apart from commission based on contract amount, if I have submitted my PAN/Aadhaar in India? Can you tell the calculation for gross earnings of USD 1000?

AleksandarD
Community Manager

Hi Jasleen,

 

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% 1.0% 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.

 

Please note that 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. The withholding tax is calculated based on the gross amount that you invoice your client for. I suggest that you check this article for more information on TDS and this one for GST.

 

Thank you.

jasleen12
Community Member

Hi Aleksander,

 

Thank you for your quick response.

I had submitted my PAN. In that case, withheld amount should have been 0.75%. However, it seems to be higher.

Gross earnings (USD) = 1000

- 10% commission       =   100

Net earnings (USD)     =  900

- Withholding @0.75% =      6.75

Net total earnings (USD) = 893.25

 

However, I received only USD 840. So, trying to understand if there is anything else I need to submit apart from PAN. Your response would be highly appreciated. Thank you.

AleksandarD
Community Manager

Hi Jasleen,

 

I'm sorry for the confusion. If you have a PAN or Aadhaar on file, we are required to withhold 1.0% of client payments to users. I edited my previous post and you can also check the help article I shared earlier as it reflects the same percentage.

 

Regarding your calculation, if gross earnings are $1,000, you should have $840 at the end:

  • 20% service fee on the first $500 = $100
  • 10% service fee on the next $500 = $50
  • Witholding tax 1% of $1,000 = 10$

For more information about the service fees, you can check this article.

 

Thank you.

jasleen12
Community Member

Thanks Aleksander! This helps.

sriramyamerla
Community Member

Hi All,

 

Did anyone (freelancers from India), receive Form 16B, or any other form which states that the tax witheld by Upwork is credited to the Income Tax Department?

 

I havent received any form, and no details are updated in Form 26AS. I was expecting at least the OCT-DEC 2020 quarter details should have been updated by now.

 

What are we supposed to do if we dont receive the Form 16B from Upwork?

AndreaG
Moderator

Hi Sri Mohana Ramya,

 

You should be able to download a Form 26AS from TRACES, after the Indian tax year closes. This form can be used to file your annual taxes. Going forward, you can also visit TRACES to see your year-to-date tax info. Additionally, we will issue a Form 16A to you. However, delays have occurred due to unclear filing instructions and limited guidance from our accounting partners in India. We know this information is critical to you and we are sorry for the delay. We will update you via email as soon as we know more. Please know that all funds withheld have been remitted to the Indian government; the delay has been in the reporting and allocation of those funds on an individual-user basis.

 

sriramyamerla
Community Member
Hi Andrea,

I have checked TRACES and it shows there is no amount credited to the Indian government for my PAN number.

Indian tax year is closed on March 31 2021, and the Form 26AS doesn't show any tax amount credited from Upwork.

anas0696
Community Member
 
2bac5822
Community Member

mpletely agree with you