Understanding PF Deductions for Expats: Are There Exceptions and Can You Deregister?

Dear All,

I saw a notification on PF regarding the deduction from an Expat's salary unless the Expat employee is from a country that has a Social Security Agreement with India. Are there any circumstances under which such an Expat does not fall within the purview of the PF Act and hence does not need to forfeit 12% of his/her Basic Pay?

Secondly, can an organization or any of its employees who have voluntarily registered themselves for PF deregister from the PF Act?

Thanks,

Under no circumstances can an international worker be excluded from the operation of Employees' Provident Fund schemes. An establishment, once covered by the EPF Act, whether voluntarily or by operation of law, will be covered till liquidation.

Regards, Madhu.T.K

Can any expat in India withdraw the employee contribution part (but not the employer part) while leaving India for migration purposes after resigning from an organization in India?

The same rules regarding withdrawal that are applicable to others also apply to expats. Therefore, they can withdraw it when they leave India.

Regards,
Madhu.T.K

I am not too sure if this is correct, but to my knowledge, Indian workers are allowed to withdraw their PF balances under a number of circumstances. International workers will only be able to do so upon retirement at 58 years, as opposed to 55 years for local workers, according to the latest changes made through an amendment to the Employees' Provident Funds Scheme, 1952.

However, in the case of permanent and total incapacity to work due to mental infirmity, withdrawal will be allowed. Overseas workers will need to keep their bank account in India until the refunds are received in such an account.

For example, a foreign worker who completes his employment in India at the age of 50 years will have his contributions blocked for 8 years and will have to keep his bank account open until then.

Foreigners will be content leaving their funds in India, as they will earn nearly a 9% return compared to much lower returns they can get back home.

There is a new rule expected to be in effect since April 11, according to which provident fund accounts inactive for more than three years will not earn any interest. Once this rule comes into effect, this extra return will be available only for three years after an expat leaves India. (I am not too sure if this last bit has been implemented or not).

Thank you.