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Indian TDS Tax Withholding on Upwork Earnings

bcc69213
Active Member
Aabhas S Member Since: Aug 18, 2020
71 of 283

Hi Bojan,
Thanks for your reply.

Just curious: Will I get a receipt of this? Need to share that with the accounts team.

Let me know!

Thanks

bstojadinovic
Moderator
Bojan S Moderator Member Since: Mar 9, 2018
72 of 283

Thanks for your question, Aabhas.

 

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


~ Bojan
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nitinsharma91
Ace Contributor
Nitin Kumar S Member Since: Jun 9, 2014
73 of 283

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

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
74 of 283

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.

Untitled
nitinsharma91
Ace Contributor
Nitin Kumar S Member Since: Jun 9, 2014
75 of 283

 


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). 

prachi163
Community Guru
Prachi T Member Since: Nov 4, 2017
76 of 283

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. 

nitinsharma91
Ace Contributor
Nitin Kumar S Member Since: Jun 9, 2014
77 of 283

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.

abinadab-agbo
Community Guru
Abinadab A Member Since: Sep 26, 2016
78 of 283
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.
nabhassy
Ace Contributor
Anil C Member Since: Oct 23, 2015
79 of 283

Hi Abinadab,

 

I am writing this after consulting a Tax expert.

Income Tax Department of India is not asking Upwrork to calculate freelancer's total earnings. 

What it mentions is the total amount paid by Upwork only. It is clearly stated on their website.

 

https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia...

 

Getting the money now and after 1 year are not same. 

What matters is the law. If the law says you should deduct, Upwork should deduct, otherwise not.

Please check with your legal team.

 

People working in similar platforms told me that they are deducted only if their amount is above INR 5,00,000.  I can provide proof of the email my friend got from another Job site.

prachi163
Community Guru
Prachi T Member Since: Nov 4, 2017
80 of 283

Tax Deduction at Source is very common outside Upwork, too. Most companies that hire contractors, deduct tax at source and provide the tax certificate. This is one way the government reduces the chances of tax evasion.

 

I don't see this as a problem. It's only 0.75%. That is probably much less than the actual IT most freelancers would pay once they declare their annual earnings.

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