Introduction: In our previous blog, we delved into the importance of creating a safe workplace…
The Government of India in an initiative for the benefit of both the employers and employees has entered into Agreement with several countries to ensure that the citizens of their home country can remit contribution in their home country. The Employees Provident Fund Organisation has been authorised to issue the Certificate of Coverage to their citizens having signed an Agreement with the Government of India.
Foreign citizens taking up overseas assignments pay more attention to the tax regime of the country when determining costs, and often tend to overlook the social security laws of the country, which are equally important. India requires every business entity employing more than 20 people to register with the national social security system and makes it mandatory for employees and employers to contribute towards retirement and insurance schemes.
The PF contribution rate for foreign citizens registered with PF is 12 percent. The PF rate is calculated on their full salary of the person irrespective of whether the salary is remunerated in India or outside India, split payroll, or multiple country sources. The employer contributes an equal amount, with the sum of PF being 13.61 percent of the total wages of the employees. There is no cap on the salary on which contributions are payable by the employer as well as the employee. International citizens are exempt from contribution towards PF only if their home country has a social security agreement or economic-bi-lateral treaty with India.
At present, India has SSA’s with 19 countries, of which 18 are in effect. The countries being Belgium, Germany, Switzerland, Denmark, Luxembourg, France, Korea, Netherland, Hungary, Sweden, Finland, Czech Republic, Norway, Austria, Canada, Australia, Japan, Portugal.
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Withdrawal Regulations –
An international citizen may withdraw the accumulated balance in the PF account in one of the following situations:
1. At the time of retirement, that is, on or after attaining 58 years of age.
2. In case of retirement due to permanent and total mental or physical incapacity to work.
3. In case of serious illness;
P.S : The Circular is attached here for reference