EPFO exempts Singapore citizens from mandatory PF contributions
All EPFO’s field offices have been advised not to insist on deduction of EPF and EPS contributions from salaries of Singapore citizens working purely as temporary workers
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New Delhi: Retirement fund body EPFO has asked its field offices not to insist on provident fund deduction from the salaries of Singaporean citizens working purely as temporary workers in India.
“All field offices are therefore advised not to insist on deduction of EPF and EPS contributions from salaries of Singapore citizens working purely as temporary workers in establishments covered/coverable under the EPF & MP Act 1952 and who do not hold the status of permanent residents in India,” the Employees’ Provident Fund Organisation (EPFO) headquarters said in an order.
Referring to the Comprehensive Economic Cooperation Agreement between India and Singapore which is effective from 1 August 2005, the EPFO notes that the field offices are not taking due cognizance of the provisions regarding the “excluded employees” as defined under Para 83 read with Para 2 (f)(ii) of the EPF Scheme, 1952. The Para 2 (f)(ii) of the scheme provides that excluded employee means an international worker is the one who is contributing to a social security programme of his country of origin, either as a citizen or a resident, with whom India has entered into a bilateral comprehensive economic agreement containing clause on social security prior to 1 October 2008, which specifically exempts natural persons of either country to contribute to the social security fund of the host country.
A senior EPFO official said the clause clearly provides that the Singaporean working on purely temporary basis or short term and covered under social security scheme in their own country are not required to be covered under these schemes run by the EPFO.
He also said the Indian workers working on purely temporarily basis in Singapore and covered under the social security schemes run by the EPFO are also exempted from the mandatory contributions in Singapore.
Apart from this, India currently has social security agreements operational with 17 countries—the Netherlands, Belgium, Germany, Switzerland, Denmark, Luxembourg, France, South Korea, Sweden, Czech Republic, Austria, Finland, Japan, Canada, Australia, Norway and Hungary.
The social security agreement provides for detachment, totalisation and portability. Under the detachment clause, the employees of one country deputed by their employers to other country for short-term assignments are exempted from social security contributions up to a period of 60 months.
The international workers of these countries posted in India are not required to make mandatory contribution towards social security schemes run by the EPFO in India.
Employees from these countries need to produce certificate of coverage stating that they are covered under such social schemes in their country and get exemption from contribution to EPFO schemes.
Similar privilege is enjoyed by Indian employees posted in these 17 countries with whom it has signed social security agreements. However, there are a large number of countries with whom India has not inked any social security agreements. Therefore, workers from these countries are required to subscribe EPFO schemes and sometime they make such mandatory contributions in their country as well.