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Indian TDS Tax Withholding on Upwork Earnings

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Moderator
Bojan S Moderator Member Since: Mar 9, 2018
41 of 142

Hi Dilshad,

 

We've been advised that the reporting is done quarterly. So a statement will be provided to you every three months. You can check this help article for more information.

 

Thank you!


~ Bojan
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Ace Contributor
Anil C Member Since: Oct 23, 2015
42 of 142

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.

 

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Moderator
Joanne Marie P Moderator Member Since: Nov 26, 2017
43 of 142

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. 


-Joanne
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Ace Contributor
Anil C Member Since: Oct 23, 2015
44 of 142

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.  

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Ace Contributor
Nitin Kumar S Member Since: Jun 9, 2014
45 of 142

Another question for the Upwork legal team. The government of India has clearly stated that TDS should NOT be deducted if the gross amount doesn't exceed 500,000 INR. I don't see any mention from Upwork regarding this. Kindly clarify how are you going to ensure this?Official clause of Income Tax Department, IndiaOfficial clause of Income Tax Department, India

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Moderator
Vladimir G Moderator Member Since: Oct 31, 2014
46 of 142

Hi Nitin,

 

Thanks for your question. 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.

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Ace Contributor
Nitin Kumar S Member Since: Jun 9, 2014
47 of 142

 


Vladimir G wrote:

Hi Nitin,

 

Thanks for your question. 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.



Thanks for the clarification, Vladimir. That's fine for now. However in the long run, I wish Upwork can put efforts (consult with tax experts to find a solution where you deduct TDS as per the exemptions provided in the law). 

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Community Guru
Prachi T Member Since: Nov 4, 2017
48 of 142

Nitin Kumar S wrote:


However in the long run, I wish Upwork can put efforts (consult with tax experts to find a solution where you deduct TDS as per the exemptions provided in the law). 


This cannot happen. There is no way Upwork can figure out what a freelancer's total annual earnings are. Upwork is not the sole source of income for many freelancers.

 

The only solution here is to file for tax returns if your total annual income exempts you from paying income tax. 

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Ace Contributor
Nitin Kumar S Member Since: Jun 9, 2014
49 of 142

Prachi T wrote:

Nitin Kumar S wrote:


However in the long run, I wish Upwork can put efforts (consult with tax experts to find a solution where you deduct TDS as per the exemptions provided in the law). 


This cannot happen. There is no way Upwork can figure out what a freelancer's total annual earnings are. Upwork is not the sole source of income for many freelancers.

 

The only solution here is to file for tax returns if your total annual income exempts you from paying income tax. 


Then why would the government add this clause?  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.

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Community Guru
Abinadab A Member Since: Sep 26, 2016
50 of 142
Prachi is correct, and the clauses you keep quoting only serve to buttress her point.
Upwork cannot know the gross sales of the ecommerce participant (you), because many freelancers also do business outside of UW.
The Indian tax authority shall therefore, refund any taxes that may have been deducted, if they find the ecommerce participant did not hit the minimum threshold. Once such refund is applied, it would have the same effect of no deduction having been made.
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