Getting Paid as a Freelancer in India: KYC, TDS, and Why Platforms Ask for Your PAN

You've earned money on a platform — a contest prize, a marketplace sale, a completed challenge. You go to withdraw it and hit a wall of forms: PAN number, bank details, sometimes a photo of yourself holding your ID. It feels intrusive, and you might wonder whether the platform is collecting more than it needs.

Here's what Indian law actually requires, what's the platform's choice, and how to handle the tax side without getting a surprise notice.

Why the platform can't just send you money

Any business paying money to individuals in India is bound by two sets of rules:

Anti-money-laundering (AML) rules under the Prevention of Money Laundering Act require that businesses know who they're paying. This is where KYC — "Know Your Customer" — comes from. It exists so that platforms can't be used to move money anonymously.

Income-tax rules require that businesses deduct tax at source (TDS) on certain payments and report them against the recipient's PAN. If a platform pays you without your PAN, it has to deduct tax at a much higher rate, and neither of you gets proper credit for it.

So the forms aren't the platform being nosy. They're the platform being legal.

What's actually required

PAN. Mandatory for any payment where TDS applies, and practically mandatory for any payout above nominal amounts. If you don't have one, get one — it's free online and takes a couple of weeks.

Bank account in your name. The account must match the PAN holder's name. Platforms can't pay into a friend's or relative's account on your behalf, because that breaks the audit trail.

Proof that you are the PAN holder. This is where the selfie comes in. The platform needs to be reasonably sure that the person withdrawing is the person whose PAN and bank account are being used, not someone who's stolen those details. A live photo matched against an ID document is the standard method.

At Sanora One, we ask for the identity selfie only at this stage — never at sign-up — because this is the only point where it's proportionate. Before you're withdrawing money, we have no need to verify your face.

Aadhaar. Not legally required for private platforms to demand, and many don't. Some offer it as an alternative to other ID documents because the verification is fast. You can usually decline and use a different document.

What's not required

• Your gender
• Your religion or caste
• Your full address history
• Access to your contacts or SMS
• Your salary from other sources

If a platform asks for these as a condition of payout, ask why. There's no payment regulation that needs them.

TDS: the tax deducted before you see the money

Depending on the type of payment, the platform may be required to deduct tax before paying you:

• Contest and lottery winnings above ₹10,000 in a year attract TDS at 30% under Section 194B. This is the harshest rate and it applies to prize money.
• Professional or freelance fees above ₹30,000 in a year attract TDS at 10% under Section 194J.
• E-commerce sales through a platform attract TDS at 0.1% under Section 194-O once you cross ₹5 lakh in a year — a very small rate, but it's there.

The platform deducts this, pays it to the government, and files a return that links it to your PAN. You can see it on your Form 26AS or Annual Information Statement on the income-tax portal.

This is not extra tax. It's a prepayment. When you file your return, the TDS already paid is credited against what you owe. If your total income is below the taxable threshold, you get it back as a refund.

The trap is when you *don't* file. Then the TDS sits with the government, you never claim it, and the tax department sees income against your PAN with no return to match. That's how notices happen.

What to do

1. Get a PAN if you don't have one. Non-negotiable.
2. Use a bank account in your own name. A separate one for freelance income makes your accounts easier at year end.
3. Keep a simple record. Date, platform, amount received, TDS deducted. A spreadsheet is fine.
4. Download Form 16A from each platform at year end — it's the certificate of TDS deducted. Platforms are required to give you this.
5. File a return, even if your income is low. It's the only way to get TDS back, and it builds a record that helps with loans and visas later.
6. If your freelance income is substantial, talk to a CA. Once you're past a few lakh a year, presumptive taxation under Section 44ADA can simplify things considerably, and a professional will know whether you qualify.

Why we're telling you this

Platforms don't usually explain the tax side. It's not their job, and it makes the payout screen look complicated. But we'd rather you understand why we're asking for what we ask for, and not get a shock in July when a notice arrives.

None of the above is a substitute for professional advice. Tax law changes, thresholds move, and your situation may have wrinkles this article doesn't cover. If in doubt, ask a chartered accountant — a one-hour consultation costs less than one mistake.