Filing W8 BEN and W8 BEN-E: A Guide for Indian Freelancers and Businesses
Form W8 BEN and Form W8 BEN-E are crucial for Indian residents and businesses earning income from U.S. clients. These IRS forms ensure you don’t pay more tax than necessary by letting you claim reduced withholding rates under U.S. tax treaties.
For individuals, Form W8 BEN is the go-to form, while businesses need Form W8 BEN-E. Though they might seem complicated at first, filling them out is much easier than it looks.
In this article, we’ll walk you through how to complete these forms, highlight common mistakes to avoid, and share tips to simplify the process. If you're a Skydo user, our customer support team is also available to assist you every step of the way.
How to Fill Form W8 BEN as Indian Freelancers?
Form W8 BEN, also known as the "Certificate of Foreign Status," is for Indian individuals earning certain types of income from the U.S., including royalties or passive income.
This form proves you're a foreign person, Indian resident in this instance and ensures your income is taxed correctly. You’ll need to submit it when asked by the payer or withholding agent, basically your client or employer in the US. even if you’re not claiming a reduced tax rate or exemption from the standard 30% withholding.
This is how a Form W8 BEN looks like:
Part I: Identification of Beneficial Owner
This section contains your personal details as an Indian resident earning income from the U.S. Here’s how to complete it:
- Line 1-2: Enter your full name and country of citizenship (India).
- Line 3: Add your permanent address.
- Line 4: Provide your mailing address if it’s different from your permanent address. If they’re the same, leave this section blank.
- Line 5: This is for your U.S. Tax Identification Number (TIN). Most Indian freelancers or remote workers won’t have a U.S. TIN, so you can leave this blank.
- Line 6a: Enter your Foreign Tax Identification Number (FTIN). For Indian residents, this is your PAN number, which can be used as your FTIN.
- Line 6b: Check this box only if you’re not legally required to obtain an FTIN in your country of residence. However, as an Indian resident, your PAN qualifies as your FTIN. If you don’t provide it, your employer or client may ask for it later, so it’s better to share your PAN here.
- Line 7: This line is for any useful reference information for you or the payer to assist in processing the form. In most cases, this isn’t applicable, so you can leave it blank.
- Line 8: Enter your date of birth in the format DD/MM/YYYY.
Part II: Tax Treaty Benefits
This is the most critical section. It allows you to claim tax treaty benefits under the India-U.S. Tax Convention to reduce or eliminate U.S. withholding tax.
- Line 9: Write "India" as your country of tax residence.
- Line 10: Specify the tax treaty article and withholding rate applicable to your income. For example:
- If you’re a freelancer earning remotely from a U.S. client, cite Article 15 of the tax convention, which relates to independent personal services. This article states that, as an Indian resident, your income is generally taxable only in India unless you have a fixed base in the U.S. or spend 90+ days there in a year.
- Your entry in Line 10 might look like this:“The beneficial owner is claiming the provision of Article and Paragraph 15 (1) of the treaty identified on line 9 above to claim a 0% rate of withholding on income from independent personal services.”
- You can also add details about the services you provide (e.g., design, marketing, or accounting) for more clarity.
Part III: Certification
- Carefully review the form to ensure all details are correct.
- Check the certification box to confirm accuracy.
- Sign and date the form.
Submit the completed form to your employer or client. If you’re a Skydo user, our customer support team is available to assist you in filling out the form and addressing any concerns you might have.
You can also download Form W8 BEN right here
Do Indian freelancers need to file a W8 BEN?
Yes, Indian freelancers working with U.S. clients must file Form W8BEN and submit it to their clients. This certifies their status as Indian residents and allows them to claim a 0% tax withholding rate under the India-U.S. Tax Treaty.
How to fill Form W8 BEN E as an Indian Business?
The W8 BENE form serves a similar purpose as the W8 BEN but is specifically designed for Indian businesses and entities rather than individuals. Like individuals, income earned by foreign entities from U.S. sources is also typically subject to a 30% withholding tax. However, by submitting a correctly completed W8 BENE, Indian businesses will qualify for a reduced withholding rate as per the India-US Income tax treaty.
Here’s what the first page of Form W8 BEN E looks like:
Part I: Identification of the Beneficial Owner
This section captures your business details:
- Line 1-2: Enter your organization’s name and the country of incorporation (India).
- Line 3: This section is relevant only if you have an LLC owned by your business that operates a U.S. bank account. For most Indian businesses, this doesn’t apply, so you can leave it blank.
- Line 4: Select your entity type. Most Indian businesses including proprietorship firm will choose "Corporation." However, pick the type that accurately represents your organization.
- Line 5: Indicate your entity’s financial status:
- For most Indian businesses, "Active NFFE (Non-Financial Foreign Entity)" will apply.
- If your business is passive, select the "Passive NFFE" option.
- If you select Active NFFE, you’ll need to fill out Part XXV on Page 7, Line 39.
- Line 6-7: Provide your permanent address and your mailing address if it differs from your permanent one.
- Line 8: Enter your U.S. TIN if you have one.
- Line 9a: GIIN (Global Intermediary Identification Number) is mainly for financial institutions. If this doesn’t apply to your business, leave it blank.
- Line 9b: Enter your Foreign TIN. For Indian businesses, this is usually your PAN or GSTIN.
- Line 10: Provide a reference number if applicable.
Part II: Disregarded Entity or Branch Receiving Payment
This section applies only to Foreign Financial Institutions. For most Indian businesses, you can skip this section.
Part III: Claim of Tax Treaty Benefits
This is the most critical section of the form, as it deals with claiming tax treaty benefits under the India-U.S. Tax Convention.
- Refer to Article 7 of the tax treaty, which covers business profits.
- Article 7 states that your business profits will be taxable only in India unless you have a permanent establishment in the U.S. (e.g., an office or base).
- Mention this article in your claim to ensure reduced or no withholding tax.
The Rest of the Form
Most of the remaining sections deal with specific entities like financial institutions, banks, and international organizations. These sections don’t apply to regular Indian businesses providing services to U.S. clients.
Part XXX: Certification
- Review the form carefully to ensure all information is accurate.
- Check the certification box, sign, and date the form.
- Submit it to your client.
Filling out the W8 BEN E can feel intimidating at first, but when you focus only on the sections relevant to your business, it becomes much simpler. Take it step by step, and you’ll be done in no time!
Can I file a W8 BEN and W8 BEN E without a U.S. TIN?
Yes, most Indian freelancers and businesses working with U.S. clients likely won’t have a U.S. TIN (Tax Identification Number). Instead, they can use their PAN or GSTIN as their FTIN (Foreign Tax Identification Number) when filing Form W-8BEN or W-8BEN-E.
How to Avoid Common Mistakes When Filling Out W8 Forms?
Filling out W8 Forms isn't really complicated. However, it is important to avoid some common mistakes to ensure your submission is accurate and hassle-free:
Choosing the correct W8 Form
There are five types of W-8 Forms, but most Indian freelancers and businesses will need Form W-8BEN or Form W-8BEN-E.
- W-8BEN: For individuals to certify non-U.S. tax status and claim tax treaty benefits.
- W-8BEN-E: For entities, like businesses, to do the same.
Choosing the correct form based on your status—individual or entity—is essential to avoid payment delays or incorrect tax withholding. Always double-check before submitting.
Tax Identification Number (TIN)
It is important to share your Tax Identification Number on the W8 Form. If you don’t have a U.S. TIN, use your PAN or GSTIN as your FTIN. Ensure the number matches your official records.
Tax Treaty Details
It is important to quote the correct tax treaty clause to be able to claim reduced tax withholding or exemption. For Indian residents, cite Article 15 (Independent Personal Services) or Article 7 (Business Profits) of the India-U.S. Tax Treaty. Clearly state your claim for a reduced or 0% withholding rate.
Entity Classification (For W8 BEN-E)
Selecting the wrong entity type or failing to declare your financial status can become a problem. Most Indian businesses are Active NFFE (Non-Financial Foreign Entity). Select the correct classification to avoid rejection.
Submitting the Form to the Wrong Party
W8 forms should always be submitted to the withholding agent requesting it, not directly to the IRS.
Simplify U.S. Payments with Skydo
Receiving payments from U.S. clients can be complicated. Banks often charge hidden fees, add forex markups, and require multiple follow-ups to ensure payments arrive on time.
Skydo offers a simpler solution. With a virtual U.S. account, your clients can make local payments, eliminating SWIFT charges. Payments are converted at live exchange rates, ensuring you keep more of what you’ve earned.
If you need help filling out your W-8 form, our support team is here to assist. Once completed, receiving payments from the U.S. becomes straightforward and efficient with Skydo.
Focus on your work, not payment hassles. Let Skydo handle the rest.
What is the purpose of Form W8 BEN and W8 BEN-E?
Form W8 BEN is for individuals, and W8 BEN-E is for entities to certify their foreign tax status and claim reduced tax withholding rates under a tax treaty with the U.S., like the India-U.S. Tax Treaty.
Do Indian freelancers need to file Form W8 BEN?
Can I file Form W8 BEN without a U.S. TIN?
What happens if I don’t submit a W8 form to my client?
How long is Form W8 BEN or W8 BEN-E valid?
