Indian TDS Tax Withholding on Upwork Earnings

lenaellis
Moderator

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.



 

454 Comments
atn05
Active Member

Hi All,

 

Is there anyone from India here whose TDS dedducted by Upwork has not appeared in TRACES inspite of having updated all Tax Information correctly & as asked by Upwork?

 

I have been raising the issue with Upwork support for several months, but all I am getting is Standard Copy/Paste answers while the clock is ticking for me to finalise my taxes.

 

Thank you!

vladag
Community Manager

Hi Atanu,

 

I understand your frustration. I reviewed your conversation with our support team and do see you've updated your tax information as advised.

I do see our team shared this information on your tickets but I'd like to clarify that transactions of freelancers who previously provided their Aadhaar number to Upwork could not be reported to the Indian tax authorities.

For this reason we sent an email notification at the end of July to users located in India titled "India TDS (Form 26AS) update - Action required", which includes the following information: "As per Central Board of Direct Taxes (CBDT) Notification No. 95, dated 6 November 2019, it was provided that Form 26Q (i.e., the statutory form for filing TDS statements for payments to Indian residents) is to be modified to include an “Aadhaar” field. However, as of today, Form 26Q has not been updated to include Aadhaar. If you previously provided your Aadhaar number to Upwork, your transactions could not be reported to the Indian tax authorities. We highly recommend that you provide your PAN so that we can submit your transactions to tax authorities."


We will be filing an amendment to the Income Tax Department 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. As long as the correct tax information is added to your Upwork account you don't need to take any other action at the moment. After the corrections in September, you'll be able to check and confirm if the tax information you uploaded recently to your Upwork account is reflected correctly in TRACES.

atn05
Active Member

Hi Vladimir G,

I appreciate your response.

 

It was Upwork who gave me the option to update either Aadhaar or PAN and I followed instructions and updated Aadhaar.

 

My PAN and Aadhaar have been linked with 'Income Tax Department' in India AT LEAST 2 years before Upwork started deducting TDS in October, 2020. So technically it should have worked. Nevertheless, I removed Aadhaar and updated PAN on 28th July 2021. But I was not sent any notification like you have mentioned for the same. It was ONLY in response to a query sent by me I was told to update the same by Upwork Support.

 

From your message it appears Upwork has not even initiated the process of rectifying this issue yet. But Upwork support told me in July that it will be all sotred out in a week or two. Then in August I was told it will be sorted out in September. And today I learn nothing has been done.

Upwork is entirely responsible for this fiasco, not me. I will be finalising my tax and pay it on 17th Sept, 2021 (I have to). Not only I am having to pay interest on the tax I owe Indian Government, but I have hired an accountant who is having to do extra and repeated work which also costs more money. Once I pay my Taxes, I would have paid the amount deducted by Upwork twice just because Upwork could not resolve this issue in time. So it's upwork's moral resposbility to refund me the amount deducted from me (roughly 60 USD only) from October 2020 - March 2021. When I asked the same question to Upwork support, they have gone all silent on me.

 

Perhaps you can see that I have been doing steady business with my client and upwork is taking their commission nicely every week. But this whole thing has left me beyond disappointed. I will seriously consider leaving Upwork and taking my business somewhere else.

 

Thank you for your time & Response. Much appreciated.

vladag
Community Manager

Hi Atanu,

 

I realise that this situation is difficult and frustrating. I've checked and can confirm an email notification was sent to your registered email address. Could you please check your inbox and spam folder for the email titled "India TDS (Form 26AS) update - Action required" and let me know if see it?


atn05
Active Member

Hi Vladimir,

 

I ran a search in my email with the subject line 'India TDS (Form 26AS) update - Action required', and only email that came up was the email notification from your message here yesterday (screenshot attached). So I definitely did not receive that notification. I also went through the spam folder manually, and usually emails from UpWork come to my Inbox.

 

Thank you & Have a good day!

manshul
Frequent Visitor

Hi there,

 

I have updated my tax information from Aadhar to PAN number before August 15 as suggested, but its september 14 and still Traces form doesn't show my TDS deducted by Upwork. The last date to file for income tax is 30 sept. please help.

dilpreet2012
Frequent Visitor

I have added my PAN Number still I got charged 5% and it has been mentioned that 1% will be charged. 
How I can get support to have 4% back which got charged addtionally.

vladag
Community Manager

Hi Dilpreet,

Thanks for your question. For Upwork users that do not have a PAN or Aadhaar on file, we are required to withhold 5.0% of client payments to users. I checked your account and it appears the most recent transactions with 5% TDS charge date before the PAN was added to your tax information. Note that the 1% withholding rate will be applied moving forward.

pkshah22
Frequent Visitor

Hi Vladimir

 

Can Upwork atleast state the date, when they are going to resubmit the correction data ? this small information will also be helpful.  First helf of September is already over, & as per the last mail I got Upwork was planning to submit the data in september so that we can file our return. but there was no statement from Upwork until now. 

 

so please kindly state when Upwork is planning to resubmit the data. 

api_jb
Frequent Visitor
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