PF contributions mean not paying for social security

If the Indian employee does not obtain a certificate of coverage from the provident fund authorities, she may qualify as an ‘International Worker’


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How does India’s social security pact with a country affect my working status there?

—Ritu Jain

India has signed Social Security Agreements (SSAs) with 18 countries, of which 15 are operational as on date. These generally provide for ‘detachment’ benefit under which, on obtaining ‘certificate of coverage’ from the home country social security authorities, the employee is exempt from contributing towards the host country social security. For example, an Indian employee sent on assignment to a country with which India has an SSA with a certificate of coverage from Indian provident fund authorities will be exempt from contributing towards the host country’s social security (covered under the SSA) provided the Indian employee continues to make contributions towards provident fund in India.

If the Indian employee does not obtain a certificate of coverage from the provident fund authorities, she may qualify as an ‘International Worker’. An Indian employee may qualify as an ‘International Worker’ once she satisfies the following conditions:

1) She has worked or is going to work in a foreign country with which India has entered into a SSA; and 2) She is eligible to avail the benefits under the social security scheme of that country by virtue of eligibility gained or going to gain under the SSA.

However, on obtaining ‘certificate of coverage’ in India, such an Indian employee will be exempt from the host country’s social security and will not be eligible to avail benefits under the programme and therefore, does not qualify as an ‘International Worker’.

‘International Workers’ are entitled to withdraw from provident fund only under the following circumstances:

1) On retirement after attaining the age of 58 years;

2) On permanent and total incapacitation;

3) On ceasing to be an employee of an Indian entity (if covered under the SSA).

If you are going on an assignment to a country that has SSA with India, while continuing the employment with the Indian entity, you may obtain a certificate of coverage to claim exemption from host country’s social security. But if you are going to take up employment in a country with which India has an SSA after terminating your employment with the Indian entity, you will not be able to claim exemption from that country’s social security as there will be no contribution towards provident fund in India. Also, you may qualify as ‘International Worker’ on return to India.

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