Tax Deducted at Source (TDS) for Indian Freelancers
The government of India has introduced an income tax called Tax Deducted at Source or TDS as part of their Income Tax Act. E-commerce companies operating in India such as ourselves are required to deduct TDS on client payments received by freelancers residing in India.
TDS collection starts from October 1st 2020. Note that this was previously set to April 1st 2020 and was later amended by the Indian government. Those who were charged TDS from April to September 2020 were already refunded on the platform.
How is TDS deducted?
For freelancers and agencies who have not provided a PAN, we will withhold 5% of all your earnings on the platform from when TDS was implemented.
For freelancers classified as Specified Person, 5% of your earnings will be withheld, whether or not you have PAN in your account.
For those freelancers and agencies who have provided a PAN, we will withhold 1% of your earnings if:
- you have earned over INR 500,000 in the current financial year, or
- you declared that you will earn more than the threshold in a financial year.
To manage your TDS setting, follow these steps:
1. Click your profile picture thumbnail from the main menu bar, and choose Settings.
2. Click Payment & Financials.
3. Go to the Tax Information section.
4. Under TDS Identification Number, input your PAN in the text field.
5. Click Save TDS Identity to complete.
6. (Optional) Tick Opt-in for TDS if you think you will exceed the threshold of 500,000 INR earning to avoid getting charged a lump sum once you go over the threshold.
For Indian users with an existing Aadhaar in the account, a banner has been posted in the account and emails were also sent as a reminder to indicate PAN since Aadhaar will no longer be needed by the Indian Government for TDS. The TDS will also be set to a lower rate (1%) for now however, Indian users are required to provide PAN by 2021 May 17. If you need assistance configuring your PAN in the Settings page, you can click Contact Us below.
Note: All collected tax will be remitted to the Indian government. For assistance in claiming tax refund and for other tax-related inquiries, we strongly advise for you to contact your local tax advisor to get accurate recommendations.