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inoactiv
Community Member

FIRC certificate from Upwork

Do anyone has any idea how to get an FIRC  Certificate(Foreign Inward Remittance Certificate) from earning of upwork.

As per GST LAW which is applicable from 1st July.  There is a 18% charge on any payments received as INR.

LFT payments are first converted from USD to INR and then it is transfered via bank to Indian bank. 

But when u receive payments in INR then it does'nt qualify for GST 18% tax relief.  Only the bank which does the converstion can provide this document. So local bank cannot provide since they received converted money only.

If we are able to get FIRC certificate then it can be proved that money was earned in foreign currency and it stands for tax relief.

Does anyone has any solution how freelancers from India can save there money from GST 18%

ACCEPTED SOLUTION

~Andrea
Upwork

View solution in original post

124 REPLIES 124
vladag
Community Manager
Community Manager

Hi Angad,

 

I understanding the importance and can confirm that the only certificate we can provide is the Certificate of Earnings (available under Reports), which clearly states that the funds earned are in USD.

~ Vladimir
Upwork
inoactiv
Community Member

Thanks Vladimir G for your suggestion. However, as I see Certificate of Earnings May not work in this case.

Since FIRC Certificate is always prepared by the bank who does the money conversion. And Government requires FIRC document as valid proof of the same.


As I have researched on the Internet, Paypal has already setup a page which they have guided local banks who receives the NEFT via Paypal to get in touch with Citi Bank which is the intermediary bank who transfers money from PayPal to India.

https://www.paypal.com/in/webapps/mpp/firc-certificate

Now in Upwork case my suggestion is they can also setup such a page where they first provide which bank is transferring and converting Payments from Upwork to India.

So we can request our bank to get in touch with that Intermediary bank used for conversion so the FIRC document can be received. This is the only solution I see to atleast get the document.

Because there is no mentioning of any bank used by upwork for transfer also even if we get may not be able to contact them. Only the local bank may contact them that is the only possibility.

This is really important since the New Norms of GST Tax is going to create issue for freelancers in India to Provide Proof of Export Services and get 18% relief of Tax.

vladag
Community Manager
Community Manager

Hi Angad,

 

Thank you for providing the additional information and the background, I'll follow up with our team and share more information soon.

~ Vladimir
Upwork
inoactiv
Community Member

Hi Vladimir,

Were you able to discuss about this matter with you team. Any update for us?

Regards,
Angad

aocumen
Community Manager
Community Manager

Hi Angad, 


As per the advise of the team, the FIRC needs to be provided by the bank to the customer, in this case, you, when the customer receives payments in foreign currencies. If the customer received it in INR< the bank does not need to provide a FIRC. 


~ Avery
Upwork
inoactiv
Community Member

Hi Avery,

Thanks for your reply.

I did get your point the bank needs to provide FIRC if the money received is in Foreign Exchange. To receive that we can do Wiretransfer via upwork. But fees is $30 per transfer which is very costly.

However LFT cost only $0.99. And I discussed with my local bank and they provided me information that UPWORK is sending money via Standard Chartered Bank to India incase of LFT.  Money is received in Mumbai Branch of Standard Chartered and then it is Fwded futhur via NEFT to the account holders bank.

So finally Can we get information if Upwork is sending Dollars to Standard Chartered Bank In india incase of LFT also?

If this is the case then money landed in India is Foreign Exchange and it will be exempt from any GST tax. Then we dont have to use Wiretransfer and pay any extra fees and keep using LFT.

Futhur If needed I can ask my bank to connect with Standard Chartered Bank and they can send the FIRC to my bank and Issue will be resolved.


Andag,

 

Direct to Local Bank payments to India are converted to INR prior to leaving Upwork's bank. All funds are send to our partner bank in INR currency so FIRC form should not be required.

~ Valeria
Upwork

Thanks for clarification Valeria. 

 

If as you said upwork bank is sending INR via LFT to India then there is no point of FIRC. And this also means the payment is subject to GST 18% tax as It has landed India in Indian currency and not foreign currency.

This is going to be a problem for us since now we need to use Wiretransfer method and pay $30 for each transfer to receive foreign currency and save 18% tax.

Or we hold money in Upwork account and withdraw money maybe monthly depending upon how much you are earning weekly.

Is there any other cheaper method or solution available for us to receive foreign currency without paying so much charges?


vladag
Community Manager
Community Manager

Hi Angad,

 

I'm sorry about the charges related to receiving funds in your country. Please feel free to review other available withdrawal methods and select the one that works best for you.

~ Vladimir
Upwork
inoactiv
Community Member

Vladimir can we know and confirm which banks are being used to transfer money from Upwork to India.

Both Incase of LFT & Wiretransfer.


Angad,

 

Direct to Local Bank transfers for INR currency and USD SWIFT wires are processed by Wells Fargo in the United States.

~ Valeria
Upwork

Upwork is underestimating the GST impact and should have put some effort in figuring out this issue with their legal team. Unfortunately that will happen only when RBI suddenly halts their operations in India for some reason - Reminds me of what happend to PayPal some years back.

Second, I believe wiretransfer is cheaper than LFT above $1k. Its definitely cheaper above $2k. Why? Upwork's bank does not provide a good conversion rate. But you can try that yourself and check the deductions. So why are you not using wire-transfer? If you use a bank like HDFC for any USD wire transfer, the FIRC arrives in your email inbox after a phone confirmation from the bank. Its that simple. 

Even if you have an FIRC - that does not stand as an ultimate proof if an assessment occurs. The assessing officer can reject an FIRC too if he suspects illicit transaction. The onus is on you to prove that you earnings are from exports. So maintain some documentation like invoices, transactions and remittances - and you should be good. Also if you work for Indian clients on Upwork, that should not be considered as export and must be GST taxed appropriately.

 

Requirement for FIRC is not new, it was required earlier with previous service-tax system too. But service-tax registration was "ambigiously" optional back then because of the legal language. Now the GST registration is clearly mandatory for exports.


@Anup S wrote:

Upwork is underestimating the GST impact and should have put some effort in figuring out this issue with their legal team. Unfortunately that will happen only when RBI suddenly halts their operations in India for some reason - Reminds me of what happend to PayPal some years back.

Second, I believe wiretransfer is cheaper than LFT above $1k. Its definitely cheaper above $2k. Why? Upwork's bank does not provide a good conversion rate. But you can try that yourself and check the deductions. So why are you not using wire-transfer? If you use a bank like HDFC for any USD wire transfer, the FIRC arrives in your email inbox after a phone confirmation from the bank. Its that simple. 

Even if you have an FIRC - that does not stand as an ultimate proof if an assessment occurs. The assessing officer can reject an FIRC too if he suspects illicit transaction. The onus is on you to prove that you earnings are from exports. So maintain some documentation like invoices, transactions and remittances - and you should be good. Also if you work for Indian clients on Upwork, that should not be considered as export and must be GST taxed appropriately.

 

Requirement for FIRC is not new, it was required earlier with previous service-tax system too. But service-tax registration was "ambigiously" optional back then because of the legal language. Now the GST registration is clearly mandatory for exports.


I did face the same challenge before.  What I did was to get a bank statement first.  The bank statement contained the initials of the institution in my country processing the currency conversion.  And this is what I found out: there is no document to be released to the client (that's me) relating to foreign currency conversion.  The certificate or document that says anything about this is a tool that only the bank where my account is enrolled can have access to.

 

 

If FIRC is not ultimate proof, do you suggest separately invoicing clients for each project or treating it as a "continuous supply" to upwork, and billing upwork once the payment comes?

Billing to upwork would make sense, as bank documents will show that payment was made by Upwork.

 

Why is FIRC not ultimate proof?


@Mohit A wrote:

Billing to upwork would make sense, as bank documents will show that payment was made by Upwork.

 

Why is FIRC not ultimate proof?


 My bank statement does not specify that the payment originated from this platform.  What it does state is that the payment arrived at my bank account as an inward remittance via a local clearing house (probably for currency conversion).  I issue invoices to my clients utilizing the FOREX rate and other relevant information that is supplied to me by Upwork through email.  CSV files and invoice for the service fees are found at the Transaction Hisory report page.  Service fees, bank fees and direct-to-local-bank transaction fees are not included in the computation for taxes.  What is considered as taxable is the net income that arrives at our bank account.

FIRC only certifies inward remittance from another currcency and it does not prove that your services were provided to customers outside India (for freelancers based from India).  For example, if Upwork has a client from India and you chose to use Upwork to provide them services from India and receive payments in India - you technically provide services within India. In that case, if you do not charge GST, you (and the client) are likely to be violating the law (unless your are exempted by some GST's complicated rules). There are multiple other FEMA and money-transfer regulations that are also bypassed when a freelancer-client transaction occurs on Upwork when both parties are located in India. (And its neither Upwork's fault nor the goverment's fault - think of it as a gray area).

 

So the best and the easiest way is to assume/deem Upwork as your client. You can say that "I am associated with Upwork as a consultant and they provide me projects to work on". Also, be aware, Upwork will most likely deny that statement in a legal scenario - and you can drag them into your legal battle if that situation arises.

The FIRC proves you got remittance from Upwork. Your GST tax invoices should only mention Upwork (and not the clients on Upwork). You could use the project name. Also GST tax invoices must be in INR.  So prepare your GST invoices separately with the INR amount mentioned on the FIRC with the invoice date before the Effective Date on the FIRC. And you could have a fix conversion rate mentioned in the item description

 

FIRC is not the ultimate proof, but it is still a widely accepted proof. But it can be questioned because of the complexity I mentioned above. So you need to keep a copy of all your Upwork transactions so that you can refer to them at a later date. Personally, I do not recommend to rely on the Upwork website for this.

When in doubt, consult a good CA

Hi Anup,

 

This is Anthony, a fellow-freelancer from India.

 

I had some questions on the GST and FIRC. For some reason, I cannot post messages from the Community page. Could you send me your e-mail id please? I am available at

**Edited for Community Guidelines**

 

Would appreciate your assistance on the latest cyclone to hit Indian freelancers...

 

Thanx,

rohito2b
Community Member

one of the alternate is to use the Paypal option and then get the transfer into your account. problem solved.

Hello Angad,

I am fairly new to Upwork but am facing the same issue. Money is being received as INR. My bank, HDFC, says they are getting INR hence cannot issue FIRC.

Did you get a resolution? If you are comfortable please do share.

Also, and you might already know this, upto 25 lacs of local receipts, GST registration and returns are not required. In case we treat the Upwork receipts as local receipts.

Thanks,

Ankur

 

Hi Ankur, did you find a solution? I am facing the same issue.

Hi I just wish to know about partner bank in india , I guess standard Charted . Is the account you have a " freely convertible vostro account" ? Thanks

Hi Angad,

 

Thanks for the update and we totally understand your concern, however, we can see that the only document that we can provide you is the Certificate of Earnings. We're sorry about this limitation.

- Aaron
Untitled

Hi,

Could you please tell, what is the procedure to get FIRC available under our available under-report?

 

Looking forward to hearing from you soon.

Kind Regards,

Hi Satish,

 

Our team will reach out to you via ticket as soon as possible and assist you further with your FIRC certificate. Thank you.

~ Goran
Upwork
s_amardeep
Community Member

If we follow this method.. Will there be any problem in obtaining refund? The remittance will show groom upwork and not mr a or mr b..


Amardeep S wrote:
If we follow this method.. Will there be any problem in obtaining refund?
That's a good question.
The remittance will show groom upwork and not mr a or mr b..

 

s_amardeep
Community Member

Because upwork cam be used to work for Indian clients, my ca advises against billing upwork and making separate invoices for each project. He says that the same rules that apply to amazon sellers can be assumed to apply to upwork, as it is also a marketplace and were are the sellers. Amazon sellers are required to bill the end consumers and not amazon. My ca also recommends creating a contract on word with details of addresses of both parties, rates and description of work.. so if ever needed we cam show that client was outside india.. we can show up work invoices too, to support our claim.

I don't know if the govt wants the remittance to show it's from the client.. but the wording"Statement of invoices" makes me feel that we can submit and firc and along with it a statement showing the invoices for separate project that are included in it.


@Amardeep S wrote:
Because upwork cam be used to work for Indian clients, my ca advises against billing upwork and making separate invoices for each project. He says that the same rules that apply to amazon sellers can be assumed to apply to upwork, as it is also a marketplace and were are the sellers. Amazon sellers are required to bill the end consumers and not amazon. My ca also recommends creating a contract on word with details of addresses of both parties, rates and description of work.. so if ever needed we cam show that client was outside india.. we can show up work invoices too, to support our claim.

I don't know if the govt wants the remittance to show it's from the client.. but the wording"Statement of invoices" makes me feel that we can submit and firc and along with it a statement showing the invoices for separate project that are included in it.

 1) UW does not have to be written in the invoices since UW is not our customer.  We issue invoices per project if it's a fixed-price contract and per time segment if it's an hourly contract.

 

2) I do have a stock of printed invoices issued by the platform for both direct to local bank transactions and UW service fees.  These will come in handy if auditing by a Certified Public Accountant will be required in loan applications for instance.

 

3) Submitting an FIRC and showing invoices seem contradictory as the former asserts 0% tax while the latter is supposed to be for those who want to pay for taxes.

vinner_2112
Community Member

Can anybody confirm:

 

what action UPWORK is taking in this regard?

 

What is the actual procedure we need to follow, because most of CAs in India are not giving appropriate assistance due to lack of knowledge or confusions in this matter.

 

Thanks.

Regards,
Vinay Jain


@Vinay J wrote:

Can anybody confirm:

 

what action UPWORK is taking in this regard?

 

What is the actual procedure we need to follow, because most of CAs in India are not giving appropriate assistance due to lack of knowledge or confusions in this matter.

 

Thanks.


 1) I remember that upon signing up here as a user of this platform, I was asked to fill up W-8BEN, a requirement for payment processing.  The form tells me that I am not filing for taxes in the US since I am a non-US citizen.

 

2) Freelancing business is, relatively, a new field.  But it can be registered as a valid business.  Freelancers can be business owners since we have clients, we receive payment for the services or goods that we offer, we disburse cash in maintaining our operations, and we issue invoices for cash received and collect and record all invoices associated with disbursed business funds.

Hi, I just had chat with support team and they are saying we don't provide FIRC to Indian Freelancers. Now I think this is a big trouble for us as without FIRC I don't think we have any way to prove remittence is from Outside India for Export of service and hence obtain 0% GST, otherwise we will have to pay 18% GST. Anyone knows how to proceed on this can help us here?

Thanks.

Start using Wire Transfer in USD. The receiving bank will provide you with an FIRC. This the bank where you have an account and where you receive the money

 

For example, HDFC has a pretty simple procedure on phone and FIRC is sent over email - you just need to be pretty clear to them on your purpose code.

 

I just had chat with support team and they are saying we don't provide FIRC to Indian Freelancers. 

They (Upwork) are just being careless by providing Indian Rupee bank transfers without appropriate documentation. This mounts to tax-evasion (service taxes) from Upwork's side and it is known for forcibly passing on costs to freelancers. It is just a matter of time before it takes a hit. Be safe, use USD wire transfer

Thanks Anup for your response. I have decided to discontinue LFT and for the time being I am thinking about using Paypal (people say they provide FIRC, but I am yet to get FIRC for Paypal transactions too, I approached my bank for this today, and my home branch had no idea what I was talking about). Wire transfer I have never done, nor I am getting details about it from my IDBI home branch, so I am a bit sceptical about it. Is paypal option also risky?

And what about my past transactions that has already happened via LFT, do I need to pay tax on them? It's quite annoying that you are earning in Dollar and still because of technicalities we might be liable to pay tax? Is there no way without FIRC that we can prove to the authorities that we have earned dollar from foreign clients and somewhere in the chain it is dollar being converted to Rupees.. and also the conversion mail that is sent by Upwork mentions conversion charges which itself proves we have earned dollars. 

Has anyone been able to prove LFT tranaction as a valid non taxable thing?
Thanks.

And what about my past transactions that has already happened via LFT, do I need to pay tax on them?

GST makes you liable to pay service taxes - even on export of services. The ambiguity that existed in previous Service Tax has been removed . The thing is, a refund can be claimed later on the taxes you paid.

 

If you earned a single rupee from exports and are not already GST registered, you are in violation of the law - consult your CA.  Don't worry, many people are unaware and just chose to ignore the past records and start clean from the new invoices - I am not suggesting you do that, but just so that you can make an informed decision.

 

If you do not want to pay tax on export of services, you need to get a LUT signed for the fin. year. Any invoice raised before that LUT date - you need to pay tax and then claim a refund. But the GST fun doesn't end there - its way more convoluted. 

 

However, please note I am not a GST expert and it has changed so fast so often that I no longer update myself with it. Please consult a good CA about it.

PS: You still need to pay income tax on the income

 

> Paypal

My experience with them is not good. Plus they deduct a lot of money in conversion apart from the mentioned fees. Its hard to get a FIRC for PayPal - but PayPal is recognized pretty well - and it follows RBI procedures. i.e In case of an assessment, most officers will not question your PayPal transactions.

 

If you think $30 wire transfer fee is higher on Upwork, try to withdraw only after a $1.5-2k amount. It saves you from a lot of procedural headaches when money is received in India. For FIRC, try to open an account with a reputed private bank - Govt banks have unnecessary paperwork to get an FIRC.

 

 

 

Thanks Anup. I will start afresh as I can't do much about past transactions. Probably I will change my bank as they aren't good, which is best for us? I live in Pune so I have all bank options. And yes a good CA I will have to look for, do you know any in Pune? Thanks again for your help.

 

which is best for us?

I use HDFC, but have heard good things about ICICI and Axis too. HDFC for sure does the FIRC work over phone and email -  and its hassle free. 

 

> A good CA

I don't have any recommendation in that city. A good CA is hard to find. Find a few, go and talk to them, ask questions, pay their consulting fee and then finalize on one of them. Especially after GST roll out - they all are very very busy - so avoid meeting dates between 10th and 20th of each month.

Thanks a lot for your clarifications.

Thank, Soumya. I will try your suggestions, hopefully, it will save me from the headache of paying 18% GST on the export of services where payments are received in USD on Upwork but paid in INR to the local bank.

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