Indian TDS Tax Withholding on Upwork Earnings

[lenaellis]

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.

[mrshrikantgupta]

Hello Everyone

There are around 100s of post dated 2019-2020 on the GST and Tax thing and I want to check the latest update.

1. Any option where we can get INR invoice?

2. GST is included in the invoice, anyway, we can claim the same if I have a sole proprietorship firm?

3. I can see TDS transaction in TRACES (govt portal), I think we can claim back during ITR, right?

I am new to this, so need your help.

[VladimirG]

Hi Shrikant,

To your first question, please note that invoices on Upwork are issued only in USD. Please check to the recently sent email notification ("India TDS (Form 26AS) update - Action required") and refer to the conversation details and rates I'm copying from the email: 

Foreign Exchange rates — Your transactions are converted using the month-end State Bank of India Telegraphic Transfer Buying Rate. Please see below for your reference.

Month	Rate
October 2020	USD $1 = INR 73.80
November 2020	USD $1 = INR 73.55
December 2020	USD $1 = INR 72.79
January 2021	USD $1 = INR 72.58
February 2021	USD $1 = INR 72.59
March 2021	USD $1 = INR 73.06

Regarding your second and third question, you may wish to consult with a trusted tax expert or advisor. Hopefully other freelancers who might have the specific information you're looking for follow up on your post and share their experience. As a note, the India government requires Upwork to deduct income-tax from the gross amount, which includes freelancer service fees. That being said, since payments for Upwork's services are not subject to Indian withholding tax (because Upwork's services are performed outside of India), you can deduct these expenses when filing your taxes. When filing a tax return with India, freelancers should report the gross payment from their client as income, and then claim the services fees paid to Upwork as a deduction. As mentioned, it's best to consult with a local tax expert for more detailed information.

[vivekmehta1]

I need a clarification on what should be considered my earning from Upwork. I get the amount after deduction of Upwork fee hence my earning is Billed amount - Upwork fee. I have no control over the account which collects bill amounts. It is Upwork's account. I get paid after deduction and can claim only to the extent of the difference. So how can my earning be called equal to the billed amount. I have no issue with 1% TDS deduction.

Can someone clarify stand a tax man will take?

[vgshyam]

Hello,

  I'm from India and when I joined the upwork. I have provided AAdhar number but I saw that it is showing as PAN number instead of aadhar number and WHT is not showing my TDS account.

Now I have an updated PAN number so will I get TDS in an account?

Regards,

Ghanshyam

[vivekmehta1]

You should. Please check your next invoicing in Txn report.

[vivekmehta1]

Thanks for sharing conversion rates.

For consistency, could you please also share rates from the same source for Apr 2020-Sep 2020.

[VladimirG]

Hi Vivek,

Thank you for your question. Please note that Upwork began collecting TDS on payments to service providers in India starting October 1, 2020. and we have no historical foreign exchange rate information for the periods you're asking about.

[vivekmehta1]

Hello,

Indian Financial year begins from 1 April and hence I need to convert my FE earnings for Apri-Sept.

If I use the same source for conversion it would be better.

Maybe you can provide me a link to get the conversion value for consistency.

Thanks

[vivekmehta1]

Hello Vladimir,

This is in continuation to my email sent 4 hrs back requesting the source (link) for taking conversion rates for Apr-Sep20.

I am enclosing SBI official FE rates published for the last working day of Feb 2021.

The value in this sheet  (see highlighted) does not match with the value provided for Mar21 or Feb 21 provided by you(Upwork). The same is the case for other months hence my request.

As per my understanding rate for Mar 2021 should be taken from this Feb 21 table.

[svijay84]

Any one else still facing the 26AS issue?

I updated my PAN details more than a month ago but 26AS is still not visible on my account. The last date for filing is 30th Sept, so the sooner this issue gets fixed, the better it is for us freelancers.