Norway nudge to US pact
New Delhi, Feb. 4: The notification of a social security deal with Norway – often called totalisation agreements — may pave the way for a similar pact with the US that has been hanging fire for a decade.
Under the pact, employees sent by Indian firms to Norway on a pre-determined term of up to 60 months will not be required to contribute towards social security schemes in that country.
Similarly, Norwegian employees posted in India will enjoy the same benefit after producing a certificate of coverage, declaring that they are contributing towards social security schemes such as PF and pension in their country.
Top officials said a totalisation pact, which could save Indian software professionals an annual outgo of $2 billion in the US, was in the pipeline though discussions had been on for over a decade.
A totalisation pact is signed between nations to avoid the double taxation of income for social security contributions.
Indian software professionals travelling to the US on short-term contracts have to pay social security contributions, which they can never claim on their return home. Expatriates have to continuously work in the US for 40 quarters, or 10 years, to claim a refund. However, most techies travel to the US on three-year or five-year visas.
India will now use the Norwegian and similar pacts to convince the US to offer a similar deal.
“In pursuance of the social security agreement signed with Norway, the Government of India has notified it…(it) has come into force with effect from January 1, 2015,” an order of the Employees’ Provident Fund Organisation said.
According to the government notification, the EPFO has been identified as the agency to implement this pact in India.
At present, India has such agreements with 12 countries – Belgium, Germany, Switzerland, Denmark, Luxembourg, France, South Korea, the Netherlands, North Korea, the Czech Republic, Finland and Hungary.
