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.

[anas0696]

New rule of withholding TDS for indians is going to start from Oct.1.

So now freelancer earning will be like 20% upwork commission, 0.75% TDS, $1.5/10 connects, $0.99 per withdrawal to local bank, this is so ufair upwork should reduce the commission fee they have imposed, or should provide free monthly connects.

[abinadab-agbo]

The dead hand of the tax man.

[pathakharsh78]

Take everything whatever we are earning... 😞

20% Fees!

Paid Connects to send Proposals!

Withdrawal Fees!

and now TDS withholds!

Seems like in near future only paid membership to create an account on Upwork!!

[nishamoon]

Hi,

I do all my work exclusively through an Agency in Upwork and all payments go to the Agency. Would the withholding tax apply to me or the Agency?

Regards

[amitdmsp]

If I am working under agency, do I need to provide my personal PAN and Aadhar details instead of the company's details? (As per the new rules of Upwork for Indian freelancers and companies)

[tinker_bell3]

Hi Amit,

I'd like to share the information that Lena noted on the announcement she posted here.

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.

[disha_india]

I have the same question. All Agency payments are going to Agency account, so is it require to add PAN for individual Freelancer?
Please let me know.
Thanks,
Regards

[pathakharsh78]

I think Agency as your account will be connected with your Agency account and payment withdrawal happen through your agency account so. 

[iaabraham]

---

Abinadab A wrote:

The dead hand of the tax man.

---

Yeah. This plus the 10%-20% fees, fees for membership, withdrawals, etc. It's just charges on top of more charges.

[nitinsharma91]

1. Why can't Upwork pay this within the big fat 20% or 10% they are earning from us?
2. Is there any clarification on how the Upwork earnings come under foreign e-commerce operators? I mean it makes sense for purchasing connects, purchasing membership etc. How exactly is working for a client an e-commerce transaction? 

[jkhamesra]

Hi Joanne,

Thanks for reposting this!

Seems like we will get TDS certificate from upwork every month and we can claim Tax credit/refund if they cut extra from Indian Gov. Make sense?

Thanks Again!

J

[k-kundan]

Nitin in my opinion you are right. The TDS should not be applicable for freelancers. We are earning forign exchanges. The new tax rule is applicable for transations where one pays to foriegn e-commerce companies in Indian rupee which is converted to foreign currency. This is applicable for any purchases eg from amazon.us or google us and similar.

Upwork needs to look into it in more detail and take more consultation.

Here is more details from bloomberg https://prnt.sc/uhu8o7 

[kochubei_valeria]

Hi Nisha, Amit, Bibhas and Harsh,

Thanks for your questions. If a Freelancer is working on a contract under an Agency, the payments go to the Agency's account. So the tax will be withheld on that payment, and remitted in the name (and using the PAN) of the Agency.

[kochubei_valeria]

Hi Jyoti,

We've been advised that the reporting is done quarterly. So a statement will be provided to the freelancer every three months with the details of the tax withheld on their behalf.

[kochubei_valeria]

Hi Harsh and others,

Thanks for your feedback. Upwork fees help to cover the costs of acquiring new clients and providing services like payment protection, customer support, and platform infrastructure. Regarding, the tax announced here, we are required to forward any tax we collect from our users to the Indian government.