Indian Tax Deducted at Source (TDS) or Withholding Tax

While Upwork is your home for work, your physical home could be anywhere in the 180+ countries where we operate. Because each country has its own rules and regulations, some people have taxes that are specific to their location. In India, this includes a number of unique taxes. One of these is Tax Deducted at Source (TDS).

What is Indian TDS?


In India, TDS is a means of collecting an income tax from you when you charge clients. Businesses are required to set aside a government portion for every payment they make in India, which is sent directly to the Indian government.

A law made effective on October 1, 2020, requires e-commerce operators outside of India (such as Upwork) to begin collecting TDS on payments made to service providers (such as the talent and talent agencies that use Upwork) based in India.

This means that if you are based in India, we are required to withhold this tax from your earnings. We then remit what we collect to the Indian government.

How much is TDS?


In general, TDS applies to all client payments sent to Indian freelancers and agencies. The amount collected is determined by whether you provided a Permanent Account Number (PAN) to Upwork and have linked it to your Aadhaar number by the Indian government’s deadline of June 30, 2023.

  • We withhold a 1% tax from your earnings if all the following apply:
    • You have provided a valid PAN to Upwork
    • Upwork has verified your PAN, and
    • You have linked your PAN to your Aadhaar number by the Indian government’s deadline or are exempt from this requirement
  • We withhold a 5% tax if you have not provided a valid PAN or have not linked it to your Aadhaar number by the Indian government’s deadline

Linking your PAN and Aadhaar numbers

Indian tax law requires everyone who had a PAN as of July 2017 to link it to their Aadhaar number by June 30, 2023. If you do not link your PAN and Aadhaar number, your PAN will become invalid and we will withhold 5% for TDS.

If you are exempt from this requirement, you do not need to take any action. For information on how to link your PAN and Aadhaar and any exemptions from this requirement, please visit www.incometax.gov.in or consult with your local tax advisor.

Claiming a credit or refund

You may be able to claim a credit for the tax withheld against your tax liability for the financial year, or seek a refund if tax withheld exceeds your tax liability for the year. You may wish to consult with a trusted tax expert or advisor for specific advice.

You will need to add a PAN and link your PAN to your Aadhaar number in order to keep the withholding tax at 1% of your earnings or to claim a credit or refund. To enter your PAN, go here

TDS reports and amendment requests


TDS reporting

We are required to file quarterly Tax Deducted at Source (TDS) reports within one month after the end of each quarter. We will email the Form 16A (Certificate of Tax Deduction) to you within two weeks after we file.

For example, for the second quarter of the Indian financial year, which begins in July and ends in September, we must file the TDS report by the end of October. We’ll send you the Form 16A within 2 weeks of filing that report, no later than November 15.

The dates for remittance and reports are the dates on your invoices to clients, not the dates that funds are available to you. To see your invoices, go to your Transaction History and select Download invoices. You can filter your invoices by date and client if you want, or view a specific invoice by choosing the reference ID number of the invoice in the Ref ID column.

Note:

The Indian government extended the deadline for first quarter 2023 reports until September 30, 2023, because they did not have the portal for submitting reports ready by the end of July 2023. We will file the 2023 first quarter report by the end of September and send you the Form 16A by October 15.

Your due date for submitting a correction request for your first quarter form 16A will be extended to December 31, 2023.

TDS amendment request timelines

There are limits on when you can request corrections to your Form 16A from Upwork. Starting with the Indian Financial Year beginning April 1, 2023, you will have the following time limits to request corrections:

  • Two and a half months from the distribution date of the original Form 16A for Q1, Q2, and Q3
  • One and a half months from the distribution date of the original Form 16A for Q4

Below are the final dates for requesting Form 16A corrections for the respective quarters:

Quarter Distribution of Form 16A on/before: Send your Correction Request By:
Q1, 2023: April – June 15 October 30 December
Q2: July – September 15 November 30 January
Q3: October - December 15 February 30 April
Q4: January - March 15 May 30 June
Q1, 2024: April - June 15 August 30 October

We will review all Forms 16A, and amend when needed, that are part of correction requests sent to us by the applicable deadline. Requests received after this date may not be processed.

Sending an amendment request

Please send your correction request to taxinfo@upwork.com by the deadline. We will respond acknowledging your request within 24-48 hours. Be sure to include the following items:

  • the e-mail address you have registered for access to Upwork
  • the reason for your request
  • the new PAN for your correction

You may also contact us if you have not received your original Form 16A by the designated time.

Frequently Asked Questions

How much will I be charged?

The amount of TDS we are required to withhold depends on whether you have a valid PAN on file with Upwork:

  • If you have a verified PAN on file and you linked your PAN to your Aadhaar number by the Indian government’s deadline, we are required to withhold 1% of client payments
  • If you do not have a verified PAN on file, we are required to withhold 5.0% of client payments

The withholding tax is calculated based on the gross amount that you invoice your client, so it is calculated prior to freelancer service fees or any other fees that may reduce the amount credited to your account.

What does Upwork do with the money you withhold? Is this just a way for Upwork to make more money?

No, we are required to forward any tax we collect from our users to the Indian government.

I don’t have a PAN, what should I do?

If you do not currently have a PAN, you may wish to talk with your trusted tax expert or advisor. Upwork cannot provide specific tax advice.

How/where do I enter my PAN on Upwork?

You may enter your PAN in the Tax Info section under Settings.

I tried entering my PAN but got an error message. How do I correct this?

Double-check the format you used. As defined by the Indian government, the proper format is:

  • 10-digit alphanumeric entry, i.e., A A A A A # # # # A
  • # = Numeric A = Alphabetic
How is this different from the Goods and Service Tax (GST)?

The GST only applies when both you and your client live in India. The Tax Deducted at Source (TDS) applies to all your earnings, including those from clients in India and around the world.

My PAN was rejected. Why?

We verify your PAN against government records to make sure it is accurate and valid. Make sure that the name on your PAN matches your legal name on your Upwork account. If you’ve made a mistake, you can always resubmit. You can check your PAN records here.

I don’t think I'm required to pay the TDS. What should I do?

Since we cannot offer specific tax advice, we suggest you reach out to a trusted tax expert or advisor to learn more about Indian TDS and your tax obligations.

Why do I have to link my PAN number to my Aadhaar?

Indian tax law requires you to link your Aadhaar to your PAN by June 30, 2023. If you do not link to Aadhaar, your PAN will no longer be valid. This means we will have to charge you 5% tax for TDS instead of 1%.

When will I receive my original Form 16A?

We’ll send you your Form 16A quarterly on or before these dates:

Q1 2023: April – June, by October 15

Q2: July – September, by November 15

Q3: October - December, by February 15

Q4: January - March, by May 15

How do I request an amendment to my Form 16A?

Please send your correction request to taxinfo@upwork.com by the deadline. We will respond acknowledging your request within 24-48 hours. Be sure to include the following items:

  • The e-mail address you have registered for access to Upwork
  • The reason for your request
  • The new PAN for your correction
Why is the amount on my Tax Deducted at Source (TDS) report different from the amount I withdrew this quarter?

The dates for remittance and reports are the dates on your invoices to clients, not the dates that funds are available to you. You can see your invoices in your Transaction History by selecting Download invoices. You can filter your invoices by date and client or select a specific invoice by choosing its reference ID number in the Ref ID column.

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