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FAQs Updated for International Workers

India
10 Dec 2012
In October 2008, the Ministry of Labour and Employment made fundamental changes in the Employees Provident Fund Scheme and Employees Pension Scheme. The authorites have updated certain FAQs which were causing confusion. Taxand India summarises the key queries the authorities have clarified.

Query 3 - Who is an 'excluded employee' under these provisions?
The earlier definition of excluded employee has been retained but has also been expanded to additionally include:
"...an IW, who is contributing to a social security programme of their country of origin, with whom India has entered in to a bilateral economic agreement which specifically exempts natural persons of either country to contribute to the social security fund of the host country."

Query 13 - What is a Social Security Agreement ("SSA")?
"A SSA is a bilateral instrument to protect the social security interests of workers posted in another country. Being a reciprocal arrangement, it generally provides for avoidance of double coverage."

Query 16 - Should the eligible employees from any country other than the countries with whom India has entered a social security agreement contribute as IWs?
"Each and every worker from a country not having either SSA or bilateral comprehensive economic agreement (referred to in answer under FAQ 3) with India has to be covered mandatorily."

Query 23 - Whether the IW will earn interest even after cessation of service after three years also in view of provisions of inoperative accounts?
"Since the provisions of inoperative accounts are not applicable in case of IWs, they will continue to earn interest till the amount of Provident Fund ("PF") is finally withdrawn."

Discover more: Updated FAQs for international workers


 

Your Taxand contact for further queries is:
Gokul Chaudhri
T. +91 124 339 5040
E. gokul.chaudhri@bmradvisors.com

 

Taxand's Take

These updated FAQs are a positive annoucement for foreign employees working in India, and will help multinationals when dealing with such internal queries. It is important to note that some of these updates will not apply to multinationals who are headquartered in certain countries, for example Query 3 solely applies to companies based in Singapore.

Taxand's Take Author