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How to deduct tax from payment

Moderator
Avery O Moderator Member Since: Nov 23, 2015
11 of 13

Hi Archana, 


You may find more information on India's service tax extensively discussed here, and here


-Avery
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Active Member
Ashish T Member Since: Dec 27, 2018
12 of 13

Hi, I could not find any correct answer for this question.

 

The querist and her accountant are actually asking question concerning Sec 195 of Income tax act, India which is similar to and known as 'tax with held'  in most countries. The query is not related to GST in India.

 

Now 195 states, in simple terms, that TDS (Tax deducted at source) needs to be dedcuted @10% (for technical services) when making a payment to a Non Resident. Upwork being a registered entitity outside will be covered in this definition even if the freelancer (payee) is in India, as when you hire a freelancer (payee) through upwork you are paying to upwork and upwork is paying to the freelancer (payee).

 

India also has Double tax avoidance agreement (DTAA) with different countries. Believing Upwork is registered in Australia, the DTAA with Australia, states that Income will be taxable in the country where the recepient is registered.

 

One can deduct TDS lower of the rate as specified in section 195 or in DTAA. In this case DTAA is lower so no tax should be deducted.

 

These are my views, if anyone has a different view please reaply.

 

 

 

 

 

 

Community Guru
Petra R Member Since: Aug 3, 2011
13 of 13

Ashish T wrote:

 

India also has Double tax avoidance agreement (DTAA) with different countries. Believing Upwork is registered in Australia, the DTAA with Australia, states that Income will be taxable in the country where the recepient is registered.


Upwork is not based in Australia, but the USA.

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