Industrial Relations And Labour Laws
23rd March 2009 From India, Kannur
Expatriates working in India and some Indians working abroad for an Indian employer are required to make mandatory contributions to the Indian government's statutory provident fund.
The provident fund contributions fund two programmes:
- The Employees Provident Fund, a compulsory savings programme, and
- The Employee's Pension Scheme.
The Employees Provident Fund and Miscellaneous Provisions Act 1952 provides for the institution of:
- Provident Funds,
- Pension Funds, and
- Deposit Linked Insurance Fund.
Also, contributions are mandatory for employees who earn up to Rs 6,500. The EPF Act can extend to other establishments that are not mentioned in the EPF Act by way of notification in the official gazette issued by the government.
It is important to note that once an establishment has been under the purview of the EPF Act it continues to be covered under the EPF Act, even if the number of employees is less than 20 at a later date.
Participation in the EPF Scheme is compulsory for employees in almost all establishments in India that meet the basic qualifying criterion of employing 20 or more persons. Since the EPF Act applies automatically to qualifying establishments, employers are required to file the particulars in the specified format for registration and allotment of business number.
The EPF Act and the relevant rules provide that the Employer's contribution to the EPF will be at the rate of 12 per cent of the wages, including the basic wages, dearness allowance and retaining allowance (if any), on its part and an equivalent amount on behalf of the employee, which is to be recovered from the employee' salary.
The EPF Act also provides for the exemption from the operation of the EPF Act in certain instances determined on a case-by-case basis.
Apart from granting exemption to an establishment from the operation of a particular scheme, the Act also provides for grant of exemption to an individual employee and also to a class of employees. Thus, exemption from the operation of the scheme is granted.
If an organisation finds that the Employees Provident Fund and Miscellaneous Provisions Act 1952 is applicable to it, then it should fill-in the prescribed form for registration. The form, along with one or more of the supporting documents, should be submitted to the respective provident fund offices for registration.
The statutory contributions are deducted from the salary of the employees and equal contributions are being made by the employers. This has increased the cost of human resources for employers.
Until now foreign nationals working in India and Indian nationals working outside the country were not required to contribute to any social security or pension scheme in India. The recent change is expected to encourage more countries to establish social security totalization agreements with India.
India has such agreements with Belgium, France and Germany and is negotiating similar agreements with Oman, the Netherlands and Bahrain.
India and the United States have been discussing a totalization agreement since 2006 but have not yet reached a consensus.
Expatriate employees are expected to be allowed to withdraw accumulated contributions when they meet the normal eligibility requirements at the end of 10 years of service.
They could also make withdrawals in keeping with a social security totalization agreement if they belong to one of the countries that has such an agreement with India or if the employee's home country has a reciprocal arrangement which permits withdrawals by Indian employees in their country.
BreadTalk - India
23rd March 2009 From India, Hyderabad
i know that i am sounding silly.... but i just wanted to confirm it .....
how about the employee who gets a regular income on our pyroll in india and yet gets a fixed amount in the forien country paid by the client....
i mean how will it be taxable etc.,
23rd March 2009 From India, Hyderabad
25th March 2009 From India, Kakinada
We have to send one of our employee to France. I inquired about Social security scheme certificate. They told me that i will get the certificate in EPFO website under international workers column. I got application but there is no information regarding documents to be attached.
Does any one knew about the documents to be submitted along with this?
24th January 2013 From India, Hyderabad
If the transferred employee is paid salary by overseas branch say US , do we still have to deduct the Provident fund even though his salary is neither processed nor paid in India . May please cklarify.
Expecting your prompt response.
27th May 2013 From India, Bangalore