Platform withholding: Slash US Taxes Legally as an Indian Freelancer

Key takeaways

What is US withholding and why does it happen?

When you earn on a US based platform, the platform must withhold a percentage if you have not proven that you are a non US person using valid tax documentation. They play it safe, deduct first, then remit to the IRS. Two flavors matter most for Indian freelancers.

Backup withholding is 24%. It kicks in when no W-8BEN is on file, or if your details are incomplete or incorrect. This is common on Upwork when the tax section is skipped.

Statutory nonresident withholding can be up to 30% on certain US source FDAP income, for example royalties from YouTube AdSense, some Gumroad digital sales, and similar creator revenues.

Here is the key distinction. If you perform services outside the United States, that income is generally foreign source. With a valid W-8BEN on file, foreign source service income is not subject to US withholding. No valid form equals withholding, valid form plus correct sourcing equals low or zero withholding.

“No valid tax form equals withholding. Correct form equals savings.”

Upwork, YouTube, Patreon, Gumroad, and Stripe powered marketplaces all follow these rules. For more background, see this overview of tax on foreign income for Indian freelancers.

Understanding the W-8BEN impact on your payouts

Form W-8BEN certifies that you are a non US person, and lets you claim treaty benefits where applicable. Individuals use W-8BEN, entities like private limited companies or LLPs use W-8BEN-E.

For service income such as freelance work on Upwork, a correctly completed W-8BEN typically brings withholding down to zero, because services performed fully in India are foreign source under Articles 7 and 15 of the India US treaty.

For royalties such as YouTube AdSense from US viewers, the treaty rate is 15% under Article 12. With no tax info Google applies 24% on all AdSense, with a W-8BEN but no treaty claim it withholds 30% on US viewer revenue, and with a W-8BEN plus treaty claim it withholds 15% on US viewer revenue only.

The W-8BEN remains valid for three calendar years from the date you sign, then you must renew. Expired forms often trigger automatic resumption of withholding on pending payouts.

For a deeper explainer, refer to this W-8BEN and W-8BEN-E form guide for Indians 2025.

Platform specific notes, withholding on Upwork, YouTube, and more

Upwork includes a Tax Information section under Settings where you submit W-8BEN details, legal name as per PAN, Indian address, date of birth, and PAN as foreign TIN. Once accepted, future payments should have zero US withholding for services performed in India. Prior deductions remain with the IRS unless you file a 1040-NR refund claim.

YouTube and Google AdSense operate differently. No tax info equals 24% backup withholding on your entire AdSense, W-8BEN without treaty equals 30% on US viewer revenue, W-8BEN with treaty equals 15% on US viewer revenue only.

Patreon, Gumroad, and creator platforms often classify earnings as royalties. With no W-8BEN expect 24% to 30%, with a W-8BEN and treaty claim expect reduced rates. Document that your creative work happens in India.

Stripe may request forms depending on your marketplace’s setup. Provide W-8BEN promptly to avoid unnecessary withholding.

For step by step platform filing help, see filing W-8BEN and W-8BEN-E, a guide for Indian freelancers and businesses.

How to reduce US withholding on platform payouts, step by step

• Step 1, File W-8BEN on every platform
  Use the platform’s Tax Information section, enter legal name exactly as per passport or PAN, Indian residential address, date of birth, and PAN as your foreign TIN. Sign and submit, most platforms confirm within 24 to 48 hours.
• Step 2, Claim treaty rates only where applicable
  Services performed entirely in India, Article 7 or 15, typically zero withholding. Royalties, Article 12, 15% rate. Do not tick treaty boxes blindly.
• Step 3, Prove foreign source services
  Add “Services performed in India” on contracts and invoices, maintain work logs, IP records, and delivery timestamps.
• Step 4, Avoid US indicia
  Do not list US addresses, phones, or bank accounts on W-8BEN. Even if you use a virtual USD account for collections, put your Indian address on the form.
• Step 5, Renew every three years
  Set reminders to resubmit before expiry, update immediately if your name, address, or residency changes.
• Step 6, Review payouts
  Scan statements for “US tax withholding” lines, if deductions appear after a valid W-8BEN, raise a support ticket and attach your form for review.
• Step 7, Recover excess withholding
  File US Form 1040-NR with proof that income was foreign source or treaty reduced, expect a timeline of several months, consider help from a cross border tax professional.

Need a primer before you file, read everything you need to know about the W-8BEN form.

Small actions, big savings, especially when you bill regularly on multiple platforms.

Treaty rates overview in plain English

Tax treaties prevent double taxation. Under the India US DTAA, royalties are capped at 15%, while independent personal services and business profits performed entirely in India, with no US permanent establishment, are generally taxed at zero in the US. This is why a correctly filed W-8BEN can eliminate withholding on service income, while reducing royalty withholding.

Avoid claiming treaty benefits for income that does not qualify, for example on site work in the US for extended periods, or income categories outside Articles 7, 12, or 15. For reference, here is a practical guide to filing W-8BEN and W-8BEN-E.

You still pay tax in India on global income, use ITR-3 as a professional or ITR-4 under section 44ADA, and claim foreign tax credit under section 90 or 91 for any US tax paid.

Common mistakes that cost you money

• Not filing W-8BEN at all, the fastest path to 24% or 30% withholding.
• Using the wrong form, individuals must use W-8BEN, entities use W-8BEN-E.
• Name or PAN mismatches, any mismatch can invalidate the form.
• Leaving foreign TIN blank, including your PAN strengthens your certification.
• Incorrect treaty claims, never tick boxes you do not qualify for.
• US indicia, US addresses or phones can trigger rejections.
• Forgetting renewals, forms expire after three calendar years.
• Not following up, if withholding persists, open support tickets with proof of submission.

For more context, revisit this explainer on tax on foreign income for Indian freelancers.

Real scenarios, how this plays out

Priya, Upwork developer
She skipped tax info, lost 24% on a $2,000 invoice. After submitting W-8BEN with PAN and Indian address, future invoices arrived with zero withholding. The earlier $480 was only recoverable via 1040-NR, which she chose to skip.

Arjun, YouTube creator
No tax info meant 24% on all AdSense globally. He filed W-8BEN, claimed treaty on royalties, now only 15% applies to US viewer revenue, non US revenue is clean. His effective deduction dropped sharply.

Neha, Gumroad and Patreon designer
Gumroad treated earnings as royalties, 30% withheld until she filed W-8BEN, then 15%. On Patreon, documenting “Services performed in India” plus W-8BEN brought service income to zero withholding.

For a detailed refresher, see this W-8BEN and W-8BEN-E form guide for Indians 2025.

How Karbon Business supports compliant cross border payments

After fixing withholding, you want fast, low cost, compliant collections. Karbon Business helps you issue clean invoices with “Services performed in India,” keep an audit trail tied to payouts, and receive funds in USD, GBP, EUR, and CAD via local routes. Hold balances for up to 60 days, convert at mid market rates with zero FX markup, and pay only a flat 1% platform fee. INR settles to your Indian bank in 24 to 48 hours, and your e-FIRA is auto generated within 24 hours for FEMA and tax compliance. Clean records also make 1040-NR refund filings simpler if you ever need them.

When should you consider other cross border payment tools

• Karbon Business, virtual USD, GBP, EUR, CAD accounts, zero FX markup, 1% flat fee, fast INR settlement, auto e-FIRA.
• Wise Business, multi currency accounts and transparent pricing, good global reach, INR settlement may take longer, e-FIRA must be arranged.
• Payoneer, widely accepted by marketplaces, FX margins can be higher, support queues vary.
• PayPal, very convenient, but fee and FX costs add up for regular income.
• RazorpayX International, Indian business focused, solid integrations, fees competitive for SMBs.

Final compliance note

This is general information as of early 2025, not tax, legal, or financial advice. Rules and platform policies evolve, consult a qualified CA or cross border tax professional before making compliance decisions.

Take action now to keep more of what you earn

You can stop unnecessary withholding today. Log into each platform, find the tax info section, complete W-8BEN with your legal name, Indian address, PAN, and date of birth, claim treaty benefits only where appropriate, then confirm acceptance. Review recent statements, if you still see withholding, raise a ticket and attach your form. Set a reminder to renew every three years.

If you want a smoother flow from invoice to INR, with clean documentation for tax filing and refunds, open an account with Karbon Business. Faster collections, zero FX markup, auto e-FIRA, and less time wasted on admin.

FAQ

How do I fill W-8BEN on Upwork as an Indian freelancer, and what should I enter as my foreign TIN?

Open Upwork Settings, Tax Information, choose W-8BEN, enter your legal name exactly as per PAN, your Indian residential address, your date of birth, and put your PAN in the foreign TIN field. Leave the US TIN blank unless you actually have an ITIN or SSN. Submit and wait for confirmation, future service payouts should have zero US withholding if your work is performed in India.

What is the 24% backup withholding I see on my Upwork or AdSense payouts, and how do I stop it?

Backup withholding applies when no valid tax form is on file. Submit a complete W-8BEN, ensure your name and PAN match your platform profile, and for service income performed in India the withholding should drop to zero. For AdSense royalties from US viewers, claim the India US treaty to reduce to 15% on the US portion only.

Do I need an ITIN to submit W-8BEN as an Indian freelancer?

No, most freelancers do not need an ITIN to submit W-8BEN. The foreign TIN field can be satisfied with your PAN. An ITIN becomes relevant if you are filing a US tax return like 1040-NR to claim a refund, in which case you can apply for an ITIN along with the return.

Will using a virtual USD account from Karbon Business create US indicia on my W-8BEN?

No, as long as you list your Indian residential address and certify non US status on W-8BEN, using a virtual USD receiving account for collections does not make you a US person. Avoid putting any US mailing address or US phone number on the form, keep your Indian details for tax documentation, and you are fine.

How do I prove to a platform or client that my services are performed in India?

Add a clear line on every contract and invoice, “Services performed in India,” keep work logs, IP address records from collaboration tools, and delivery timestamps. If asked, explain that all work is done remotely from India, with no US presence. This supports foreign source treatment and zero withholding on service income.

My Gumroad sales had 30% US tax deducted, how do I reduce it to 15%?

Gumroad often treats creator payouts as royalties. File W-8BEN and claim treaty benefits under Article 12 for India, which lowers the US withholding on royalty income to 15%. Future payouts should reflect the reduced rate, earlier deductions can be recovered by filing a 1040-NR refund claim if the amounts justify the effort.

Why is YouTube taking 24% of my AdSense as an Indian creator, and how do I fix it?

With no tax info, Google applies 24% backup withholding on your entire AdSense. Submit W-8BEN and claim the India US treaty for royalties. After approval, only the US viewer portion is taxed, at 15%. Non US viewer revenue is not subject to US withholding.

Can I claim a refund of US withholding without visiting the US, and how long will it take?

Yes, you can file Form 1040-NR by mail or electronically, attach proof that income was foreign source or treaty reduced, and request a refund. Processing can take six months or more. If documentation is clean, refunds are routine, consider a cross border tax consultant to speed things up.

Which ITR should I use in India for foreign freelance income, and can I opt for 44ADA?

Freelancers usually file ITR-3. If eligible, you can opt for presumptive taxation under section 44ADA and file ITR-4, subject to its rules and turnover limits. US withholding does not change Indian tax filing, but you can claim foreign tax credit for any US tax paid.

Do I need GST for exporting services to US clients as a freelancer?

Exports of services are generally zero rated under GST, registration depends on your turnover threshold and specific services. Many freelancers register for GST to claim input credits and to ensure smooth client onboarding. Consult a CA for your specific situation.

What is e-FIRA, and how does it help with compliance and foreign tax credit claims?

e-FIRA is electronic Foreign Inward Remittance Advice, a bank document confirming receipt of foreign currency for services. It supports FEMA compliance and is useful evidence for Indian tax filing and for US refund claims. Karbon Business auto generates e-FIRA within 24 hours of settlement, which simplifies your records.

How can I receive ACH from US clients quickly and at low cost, and what role can Karbon Business play?

Clients in the US prefer ACH because it is cheap and fast. With Karbon Business you get a virtual USD checking account for local ACH, clients pay as if you were domestic, you hold funds or convert at mid market rates with zero FX markup, and receive INR in 24 to 48 hours, backed by auto e-FIRA for compliance.