Tax implication on payment to freelancers

I am a freelance web professional and in the course of running my business, I have to make certain payments to national and international freelancers. 

Payments to Indian Freelancers are paid primarily through cheque or NEFT. 

For international Freelancers, payment is done in USD using Credit Card through online freelancing portals like elance and upwork. 

Are there any tax implications on such payments made by me to these freelancers? I show them as Freelancer Payments in my P/L account.

Kindly provide your valuable insights on this and advise if such transactions need any special treatment while filing IT Return

 

Many thanks 

Replies (1)

Since the national freelancers whom u make payments would be professionals, you need to take their PAN and deduct tax under section 195J being payment for professional fees. In case you do not have PAN, you need to deduct tax at the rate of 20%.

In case of internation freelancers also, section 195 would attract and you need to deduct withholding tax at the rates applicable therein.

So, in case TDS is not deducted by you, such expenses will be disallowed by Income Tax Department.

 

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