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Indian TDS Tax Withholding on Upwork Earnings

lenaellis
Community Member

Starting October 1st, Upwork will begin withholding Tax Deducted at Source, TDS, from payments to freelancers and agencies located in India as part of a new tax law enforced by the Indian government.

 

As part of our continued efforts to remain compliant with tax laws in India, we are asking that our customers in India provide their Income Tax Identification number in the “Tax Info” section under “Settings”. For purposes of TDS withholding, the Indian government will accept either a Permanent Account Number (PAN) or an Aadhaar number. Please be sure to use the correct format for your PAN or Aadhaar number as defined by the Indian government:


  • PAN is a 10-digit alphanumeric entry, i.e., A A A A A # # # # A
    # = Numeric   A = Alphabetic 
  • Aadhaar is a 12-digit numeric entry


For those freelancers and agencies that have provided a PAN or an Aadhaar number:

We are required to withhold 0.75% of all your payments, starting with the first dollar you earn as of October 1, 2020, and forward it to the Indian government. The rate is scheduled to increase to 1% on April 1, 2021.

 

For those freelancers and agencies that have not provided a PAN or an Aadhaar number:

We will be required to withhold 5% of all your Upwork earnings and forward it to the Indian government. You will be able to claim a tax credit or refund from the Indian government should you pay more taxes than required. 



You will need to add a PAN or Aadhaar number in order to keep the withholding tax at .75% of your earnings.  Click here to Add Income Tax Identification.

 

To learn more about Indian TDS, click here

 

Let us know if you have any questions.



 

492 Comments
3be978da
Community Member

I have updated my PAN. When can I expect the update from Upwork on my tax filing portal? Since the deadline is Aug 15, I would like to be made aware of any glitches as soon as possible so I can rectify things on my end in time.

NikolaS
Moderator

Hi Harsh,

 

Thank you for updating your tax information. We will submit one-time corrections to the Income Tax Department in early September.

 

786khan
Community Member

@Ravikumar, Why upwork taking TDS charges. I am filling income tax and how can i know about my paid TDS fee there?

NikolaS
Moderator

Hi Malik,

 

Thank you for reaching out to us. I moved your post to this thread where you can find more recent announcement related to your concern. Please check this post for more information. 

 

Additionally, you can find more information in this helpful article about Indian Tax Deducted at Source (TDS)

 

Thank you,

ravibandaru4
Community Member

Agree with you. TDS should be on amount we receive excluding service fees

apeter5
Community Member
Does anyone notice they charge fees on their fees from us also ?
d53fd44f
Community Member

Where can I get form 24Q in each quarter. 

kochubei_valeria
Community Member

Hi Srikanth,

You will be able to download a Form 26AS from TRACES. This form can be used to file your annual taxes. Going forward, you can also visit TRACES to see your year-to-date tax info. Additionally, we will issue a Form 16A to you each quarter.

Note that there were some Tax ID validation issues that prevented Upwork from submitting certain transaction reports to India’s tax office. These issues occurred from October 2020 to March 2021. If any of your tax information from October 2020 to March 2021 is missing from TRACES, it could be because:

- You updated the tax ID you have on file with Upwork (for example, you replaced a personal PAN with a business PAN) during these months
- There was a mismatch between the name you have on file with Upwork and the name your PAN is registered to

We will be filing an amendment in September 2021 to resubmit all missed transactions. This amendment will use the tax ID information that you have on file with Upwork as of August 15. We have also taken steps to prevent the validation issues in the future.

mastervaibhav
Community Member

Did you find the answer how to claim the with held tax charged 5% before updating the PAN?

sukanyapandiaraj
Community Member

Hello,

 

For this year's tax filing, I received the upwork email that shows that TDS was calculated and deposited based on month-end State Bank of India Telegraphic Transfer Buying Rate, for each month from October 2020 to March 2021. However, the rates used by Upwork during these months were different and lower than this rate most of the time, depending on when the payment was withdrawn. Upwork has always given the rates that their bank uses on a certain day. Since things were new this year in terms of tax laws for Indian freelancers as well as Upwork, I am not expecting any changes on this from Upwork. 

But going forward, will Upwork please notify the Indian freelancers if they will be using the State Bank of India Telegraphic Transfer Buying rate for a given month? Otherwise, it gets very complicated for individual freelancers like me. Upwork pays at a different rate, then submits our TDS showing a different rate for our income. And then we are left with having to do our own calculation trying to convince our tax department, that what you see on form 26AS has something more to it and we actually didn't get paid the income that shows on it.

 

Can Upwork standardize certain things? For example, if you are going to be using the State Bank of India month end buying rates for paying me also, then I would know the rate before I decide to withdraw on a given day. That way at least there will not be such discrepancies for the next year tax filing for the Indian freelancers.

 

We are doing so many enhancements to make this a great work place for freelancers. The above would be a simple but great enhancement that you'll be able to take credit for.

If someone can tell me that something in this regard will be done before the next tax assessment, it will be great. Reply in this regard from any wise person is also appreciated; anything other than asking me to consult my tax advisor. I don't have any.

 

Thank you.