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Indian TDS Tax Withholding on Upwork Earnings

bstojadinovic
Moderator
Bojan S Moderator Member Since: Mar 9, 2018
141 of 280

Hi Sandeep,

 

Please note that withholding tax doesn't update retrospectively. It'll apply to transactions going forward after you add the PAN number. You can check this help article for more information.

 

Thank you!


~ Bojan
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sukanyapandiaraj
Active Member
Sukanya P Member Since: Sep 13, 2015
142 of 280
Hi,
Can you please find out why, as you mentioned in your reply, Upwork chooses to calculate WHT on the invoice amount and not the actual income? Do you think this is the right way to do it? I am not sure what tax experts would have advised Upwork on this. Please explain, as this is not right and contrary to what is explained in the Help page that moderators are frequently quoting in their replies.

Thank you.
kochubei_valeria
Community Manager
Valeria K Community Manager Member Since: Mar 6, 2014
143 of 280

Hi Sukanya,

 

The Government of India requires Upwork to deduct income-tax from the gross amount which includes service fees. That being said, since payments for Upwork's services are not subject to Indian withholding tax because Upwork's services are performed outside of India, you can deduct these expenses when filing your taxes. When filing a tax return with India, freelancers should report the Gross payment from their client as income, and then claim the services fees paid to Upwork as a deduction. Upwork, itself, pays taxes to the Indian Government on the services fees, remitting a 2% tax directly to the Indian government (under the recently enacted Equalisation Levy).

~ Valeria
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sukanyapandiaraj
Active Member
Sukanya P Member Since: Sep 13, 2015
144 of 280
Got it. Thank you Valeria for your explanation.

- Sukanya
keyur2020
Active Member
Keyur P Member Since: Nov 11, 2020
145 of 280

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
Active Member
Sukanya P Member Since: Sep 13, 2015
146 of 280
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.
work_connect
Active Member
Dipika A Member Since: Aug 20, 2018
147 of 280

Hi Valeria,

 

As per your explanation, whatever Upwork charges as Service fee from freelancers, Upwork is paying 2% tax to the Indian Govt. Can we get a statement as to how much tax Upwork has paid for service fee earned from individual freelancer and where can we see this in our Upwork account.

68e56446
Active Member
Ankitkumar S Member Since: Feb 29, 2020
148 of 280
It's the TDS being cut since October began. Add your pan card or aadhaar
and it will be 0.75% starting with next payment. It will show up in your
pending payments. There's an even weird thing. When your hourly payment is
in review you'll get the WHT added to pendings before the payment is there
or in available section. So just get used to it and don't forget to add Pan
or Adhaar.
gsmehra61
Active Member
Gagandeep S Member Since: Dec 17, 2018
149 of 280

Hi, I know upwork deducts extra $ if we don't add our Pan card or Adhaar card.

But I have added this from starting. But today I'm seeing upwork still deducts WHT fee from my earnings.

Any way to fix this? Or Should I start assuming that upwork now started charging more?

**Edited for Community Guidelines**

g_vasilevski
Moderator
Goran V Moderator Member Since: Mar 24, 2017
150 of 280

Hi Gagandeep,

 

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% 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.

Thank you.


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