THE government of India has targeted two birds with one stone.
With
the recent amendments to the Employees Provident Fund Scheme (EPFS) and the
Employees Pension Scheme (EPS), the government of India has forced international
workers to make social security contributions in India. Thereby the government
has succeeded in plugging a financial loophole as well as increased the pressure
on other countries to forge Social Security Agreements with India.
For
international workers, when a part of the salary was paid outside India, there
was an ambiguity on the exchange rate at which such foreign salary was to be
converted into Indian rupees for the purpose of calculation of monthly PF
contribution.
While the amended EPFS restricts the situations in which
an international worker can withdraw the provident fund accumulations, Provident
Fund refunds are now payable only to the credit of the international worker’s
bank account in India. Moreover, where the salary has been paid in foreign
currency, the rate of conversion of that currency would be the telegraphic
transfer buying rate offered by the State Bank of India as on the last working
day of the month in which the salary is due.
The amendments would also
compel countries to enter into Social Security Agreements (SSAs)with
India.
SSAs like double taxation avoidance treaties, are aimed to avoid
dual contributions under social security schemes in host and home countries.
SSAs also allow export of benefits from one country to another, depending on the
ultimate place of residence of the employee.
Under the amended EPS, the
government would no longer make any contributions to the international workers
Pension Fund. Also, international workers deputed from a country with which
India does not have a Social Security Agreement, would not be allowed to
withdraw their pension contributions on or before the age of 58, thereby
probably blocking huge amounts of contributions.
For international
workers from SSA countries, the withdrawal of PF accumulations would be governed
by the provisions of the SSA between the countries
|
