Social Security (PF) for International Workers in India – Webinar FAQs
ADP India hosted a webinar on Social Security (PF) for International Workers in India on 25 July 2018. The speaker was Anandan Subramaniam, National Manager – Statutory Compliance, ADP India’s Centre of Excellence. The webinar recording can be viewed below.
There were many interesting questions that came up during and after the webinar. While Mr. Anandan answered several of them during the webinar, there were some questions that he did not have the time to answer. We have drafted these questions and answers into a quick Frequently Asked Questions (FAQ) format, for the benefit of everyone. If you have further questions, please comment below and we’ll answer as soon as we can.
Frequently Asked Questions
1. In case an employee is deployed to an SSA country, how does the PF account in India work for him?
Such an employee needs to obtain a Certificate of Coverage (CoC) online from the EPFO before they travel to the SSA country (Note: An SSA country is a country that India has signed a Social Security Agreement with). He/she will be contributing in India as an International Worker (on Gross minus HRA), and will be excluded from contributing to Social Security in the SSA country. Once the employee is back in India, he/she will continue as an Indian employee (on restricted Basic or Actual basic, as the case may be).
2. If a person of Indian origin but holding US passport returns to India and has taken up employment in India, will he be covered under International Worker (IW) by the definition? Or since he is back in India for good and holds US passport on account of his tenure of stay in the US, is he exempted from IW definition?
No, the person would not be exempted. He is considered as an International Worker under the EPF Act.
3. We have a Director who looks after our business operations in India. He is a US citizen and is on US payroll. He has been staying in India for a long time to take care of the India company operations. Do we have to remit PF for him under IW?
Yes, he will be considered as an International Worker as he is a US citizen. PF is to be remitted in India. Withdrawal can be done only upon completion of 58 years of age.
4. Can an OCI holder from a non-SSA country have a PF account opened without Aadhaar?
Yes, as OCI holder is considered as IW, Aadhaar is not mandatory.
5. Will the EPS contribution be applicable to International Workers who have joined after September 2014? There is no separate provision for EPS in IW provisions.
No. EPS is not required to be deducted if an IW joins after September 2014. Contribution towards EPS is same for all workers.
6. Can we contribute the PF on (Basic + DA) instead of on Gross Wages for an employee travelling to Belgium from India? Basic + DA will be last drawn India salary before being deputed to Belgium.
Belgium is an SSA country. So, if a person is travelling to Belgium, he/she can remit PF in India, but it should be on Gross wages (minus HRA) only.
7. We have an employee from Belgium (SSA country) and we are contributing PF as IW in his case. Is our treatment correct?
YES, if he does not have a Detachment Certificate. This member can claim the accumulation any time after separation.
8. If a non-SSA employee is hired as an expat in India at the age of 60, do we still need to contribute for his PF?
No, not mandatory.
9. Is there any withdrawal benefit given by EPFO to an International Worker who is handicapped?
10. Aadhaar is not required for International Worker in India?
YES, that’s correct. For International Workers, Aadhaar is not required.
11. What if an IW is hired on an agreement and a monthly fixed fee is paid to them – does the employer still need to file PF return?
Yes, PF contribution should be on such monthly fixed fee. PF return also needs to be filed.
12. We have a US employee who transferred to work in India and he has contributed to PF. Can he get a refund of the PF when he transfers back to the US?
He can claim the PF only on completion of 58 years of age.
13. If an employee is deputed to the Netherlands to the client office for a period of 3 months, will he be covered under SSA?
Yes. The employee can apply for a Certificate of Coverage (CoC) and exclude himself/herself from the payment of social security benefit in the Netherlands. But he/she must remit PF on Gross (minus HRA, if any) in India.
14. Can an International Worker avail a loan from PF?
Yes, as per the applicability.
15. A person originally from India, but with US citizenship, is now working in India. Will he be treated as an IW?
Yes, as he is having US citizenship.
16. What is the penalty provision in case of non-deduction of PF of IW, once the status is clear that person is an International Worker?
- Arrears to be paid for the difference of remittance (amount to be paid minus amount already paid)
- Damage and interest (maximum 37% on the difference) to be paid
17. We have contributed past arrears under IW (along with interest and penalty) after identifying that the employee is an IW, but we have not filed any IW return for such past period. Can this be done now? We have been filing the IW return from the date the past arrears were paid.
Yes, you can file IW return now. Also, if you have already filed an IW return earlier, you can file a revised return.
IW returns are to be filed for every month.
18. How does PF work for Nepalese employees, as they face a challenge in getting Aadhaar?
Nepalese are considered as Indian workers as per EPF Act, and Aadhaar is not mandatory for them.
19. If the IW’s salary is divided into different reimbursable components, should PF be deducted on B+DA or gross salary?
It should be deducted on Gross (minus HRA, if any).
20. We had sent an employee to Japan, which is an SSA country. We missed paying the PF here, and this person did not have a CoC. He is back in India now. To get this corrected, can I still obtain a CoC for him and pay the PF here in India?
Obtaining a CoC now is not possible. Maybe you can pay PF contribution arrears with damage & interest now.
21. Can a PF account be opened through an OCI card?
Yes, a UAN can be created with OCI card details.
You can access ADP India’s previous webinar recordings here.
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