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Government Dilutes Access Rules of Provident Funds
The Ministry of Labour and Employment has further amended the Employees Provident Fund Scheme and the Employees Pension Scheme in respect of International Workers (IWs). Taxand India discovers what the amendments will entail for foreign workers in the country.
Key amendments in PF Scheme
- IWs covered under a Social Security Agreement (SSA) can withdraw their accumulated PF balance on ceasing to be an employee of an establishment covered under the Employee's Provident Funds and Miscellaneous Provisions Act.
- The PF accumulations will be paid to the IWs either directly in their bank account or indirectly through their employer.
Key amendments in Pension Scheme
- In the case of an IW covered by an SSA, for determining the eligibility for pension, their period of coverage under the relevant social security programme of their home country shall be added to their actual service in India, as per the terms of the SSA.
These amends are a welcome step for IWs as it speeds up the process of withdrawing their accumulated Provident Fund balance, once their contract in the indian company has been terminated. This benefit is more relevant in the case of all IWs who are covered under an SSA, the terms of which provide less favourable withdrawal benefits. Multinationals should highlight these amendments to their IWs in India.