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astepanov83
Member

Working with an Indian client

Hi,

 

I'm offered a job by a client who resides in India. I don't live in India and pay taxes in an another country. According to his words, I need to have an Indian tax ID in order to pay Indian taxes that are 10% of all the payments. I also should pay taxes in my country, but there is an agreement between our countries to help avoid double taxation. The question actually is should I really pay Indian taxes when we still work through Upwork and I don't live in India?

 

The question is more to Indian clients, but if someone has some information please share.

 

Thanks,

Alex

13 REPLIES 13
prestonhunter
Member

Alex:

The client you're talking to is being ridiculous.

 

Indian taxes have nothing to do with you if you work via Upwork and don't live in India.

 

As a freelancer, I have worked for Indian clients. As a client, I have hired Indian freelancers.

 

I have never had to worry about their taxes.

 

My advice to you if you are faced with a client or freelancer who wants you to pay taxes to them:

"Thank you for that information. I have your notes on this and I promise I'll provide these to my accountant who prepares my taxes. We will pay these taxes on our end, so you don't need to worry about it on your end. If you get audited, we will provide you with verification."

 

If they don't drop the matter and still insist that you pay them something, then rest assured that they are just a scammer and they are wasting your time or trying to rip you off.

Hi Preston,

 

thanks for the answer. The client seem to be reliable: I've had a skype chat to him and he possesses knowledge in a field we're planning to work in. Well, this of course doesn't mean that the job is not a scam. I've also never had such requirements when worked with clients from other countries. 

ahammed_farid
Member

From my point of view you don't need to pay tax, I am not sure your client is playing with you or not, I live in UAE and I am working with UK Company, like if i work hourly or fixed rate, upwork will cut charges, I will get mine, I am not giving any UK tax to my client. So I think maybe he is fooling you, or what

vladag
Community Manager
Community Manager

Hi Alex,

 

I don't have an insight into your communication and agree with other users' advice. You can speak with your tax advisor about taxes you need to pay in your country on your Upwork earnings, but other than that you can just propose your rate to this client, make sure not to make a payment to them on any grounds or accept a payment outside the platform.

 

Let me know if you need more information, advice or an opinion on the legitimacy of this client's communication and requests.

Untitled

Hi Vladimir,

 

thanks to everyone for your advises. Definitely won't make any payment to them.

I think it is definitely possible to have a situation in which there is a legitimate client with a real job who sincerely believes that a freelancer should pay a certain tax. But that client, however much expertise he has, is not necessarily aware of all of the ways that purchasing business to business services via Upwork is different from hiring an employee in his native country.

 

A client's sincerity doesn't negate the possibility that he is wrong. Or that he is unaware of Upwork's rules.

Hi Aleskandr, 

 

Article 14 of the DTAA with Russia ensures you don't have to pay taxes in India or have any tax deducted at source, if you're liable for tax on that particular income in Russia.

 

You can show this link to your client, especially Articles 14 and 23 of the DTAA with Russia

 

http://www.incometaxindia.gov.in/Pages/international-taxation/dtaa.aspx

 

Some clients may not be aware of specific tax rules, as freelancing is relatively a new concept in India with a small percentage of the population working as independent online contractors. 

 

Best, 

Rekha

Hi Rekha,

 

We are the employers in this case. I have forwarded this information to our accounts/legal department, yet they still seem to believe that TDS is applicable.

 

Would it be possible to put us in touch with the person who handles your accounts/legal, so we can figure out the exact clauses?

 

Best,

 

Raghav


@Raghav M wrote:

Hi Rekha,

 

We are the employers in this case.


 No, you are not an employer at all, in any sense of the word.


You are a client and you are buying a service, not an employer employing someone.

 

Whatever taxes apply in your locale are nothing to do with freelancers in other countries you buy services from via a US corporation.

 

 

Thanks for your response. Correct, we're the client, not employer. I mistyped.

 

If we hire a freelancer, we're liable to deduct tax at source - TDS for short. The freelancer is then able to get a tax credit in their home country as part of a double taxation avoidance agreement (DTAA) between the two countries. 

 

http://blog.tdsman.com/2014/02/applicability-tds-service-provided-non-residents/

https://yourstory.com/2013/09/tax-foreign-company-payments/

 

 

Workers are workers. There is no such thing as calling a lamb a duck because both are white. Refer to the article given below for a dispute between me and 2 companies to whom I provided services online as employee but was mis-classified in India as contractors. Go through the entire article in depth to know how treacherous it can be for any foreign company doing business in India :

 

https://www.quora.com/What-are-the-most-important-legal-aspects-you-need-to-be-sure-about-if-you-are...

heist
Member

I've worked with a couple of Indian clients in the past and they have never ever asked for that.

When it comes down to it, we're all just self-employed sub-contractors working for UpWork; a US corp.

 

Without UpWork, there would be no "client"; no contract. All you get to do is negotiate a rate; same as in other pursuits.

 

(This particular business model predates the internet; but back then, we were called "consultants").

 

The "pay stub" says UpWork; not Joe Blow "who I think should pay me VAT and give me his address, blah, blah".

 

The only people you owe money to is your own government (income tax).

 

The rest is a lot of bad advice; or fraud.

 

(Had the audit; passed)

 

 

 

 

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