Indian TDS Tax Withholding on Upwork Earnings

[Nitin Kumar S]

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Prachi T wrote:

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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Yep filing ITR or TDS deduction is not a problem at all. Vladimir has answered the specific questions I had on the incoming changes on Upwork.

My only followup to you was why do you think there is a clause which you suggest can't be implemented at all in reality

[Anil C]

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.

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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Nitin Kumar S wrote:

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Prachi T wrote:

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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Yep filing ITR or TDS deduction is not a problem at all. Vladimir has answered the specific questions I had on the incoming changes on Upwork.

My only followup to you was why do you think there is a clause which you suggest can't be implemented at all in reality

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[Aman A]

Hey,

I just want to ask can we withdraw payments in my HUF account?

[Aleksandar D]

Hi Aman,

You should be able to withdraw funds, but please note that the listed name on the account must match your verified name on Upwork. You can check out this help article for more information.

Thank you.

[Aman A]

Dear Aleksandar D,

I hope do you understand by HUF account?

**Edited for community guidelines*

Can you please refer above link and help me that I can use a HUF account with upwork or not?

Thanks,

Aman

[Bojan S]

Hi Aman,

I checked this and see that you've posted this question on your existing ticket with our team. Please allow time for our team to respond and update the ticket with the information you're looking for. If you have any additional questions please post them on that ticket for further assistance.

Thank you for your patience!

[Ashutosh N]

Would this 0.75% withholding tax  be charged at the time of withdrawals or would this be charged on every invoice ? 

[Joanne Marie P]

Hi Ashutosh,

For Upwork users that have a PAN or Aadhaar on file, we are required to withhold 0.75% of client payments to users. The withholding tax is calculated based on the gross amount that the user invoices their client, so it is calculated prior to freelancer service fees or any other fees that may reduce the amount credited to the user’s account.

[Aman S]

Hi Joanne,

This means tax will be deducted on the 20% Upwork fee as well. Please verify understanding as it is important for reporting purposes. 

If I complete a fixed price job of $500 for a new client and Upwork deducts $100 (20% of the contract value) as an Upwork fee. In this case, Upwork will report my earnings as $500 and will deduct 0.75% on this amount, which is $3.75 instead of the actual amount I receive, which is $400 and TDS should have been $3.00 on this amount.

So, effectively I will end up paying tax on 20% Upwork fee as well which is taken off the top. 

Aman

[Joanne Marie P]

Hi Aman,

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. The withholding tax is calculated based on the gross amount that the user invoices their client, so it is calculated prior to freelancer service fees or any other fees that may reduce the amount credited to the user’s account.