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Taxes, but No Social Security for Indian H1-B Visa Holders

Aseem Chhabra

A few years ago Ajay Sehgal (not his real name), a young Indian high tech worker based in Connecticut, received a letter from the Social Security Administration.

The letter stated that through the six years that Sehgal lived and worked in the United States -- first on an H-1B visa and later while his greencard application was pending -- he had contributed approximately $50,000 in social security taxes.

Since he was unsure of whether his greencard petition would be approved, Sehgal thought he could cash in the $50,000 and return to India. So he approached his local social security office.

"It is my money after all," Sehgal said recently. "If they will not allow me to live in this country, if I cannot retire in this country, then they should allow me to take my money and return to India. Right?"

Wrong, said the local social security office. He was told that foreign employees (including those on H-1B visas) who may have worked in the America for a few years could claim social security benefits upon retirement, but this depends on the country of their origin.

In fact, Sehgal later learned, as an Indian citizen on a temporary visa such as H-1B, he could not receive any social security retirement benefits -- even though he had legally paid his social security taxes.

"An Indian national on an H-1B visa is here for a period of six years," said Herb Loring, a social insurance program specialist with the SSA office in New York City. "And this person would get nothing. That is the law."

"But if this person came back and worked for four more years, under whatever status, and fulfilled the '40-quarters' exception rule, then this person could receive social security retirement benefits," Loring added. "Basically they cannot collect their money if they are an Indian national, unless they meet the exception."

The '40-quarter' exception rule, Loring explained, means that this person should have worked in the United States for at least 10 years. He added that this exception rule applies to citizens of over 30 countries who may have been employed in America for part of their career. The list of countries includes India, China, Afghanistan, Thailand, Kenya, Tunisia and Bangladesh, he said.

Loring added that workers from several Western European countries and Canada can claim social security benefits even if they worked in the United States for less than 10 years. The reason he said is the United States has treaties of reciprocity with these countries.

"The reciprocity rule in the treaties means that if a US citizen went to this other country and worked there for a few years under that country's retirement system, then the US citizen could also collect retirement benefits from that country," Loring said.

In addition, the United States also has 'totalization agreements' with some countries, such as the United Kingdom, under which US nationals can receive retirement benefits based on their combined work history at home and in the other country.

But America has not signed any such treaty with India, Loring said. He suggested that the reason could be that India does not have a national retirement system similar to the United States and many other Western nations.

"I cannot comment on the question of fairness or unfairness," Loring said. "This is law in the United States."

But for workers like Ajay Sehgal the laws reek of discrimination, especially since the largest contingent of H-1B visa workers in the United States are from India and China.

"I call this daylight robbery," Sehgal fumed. "This rule has to be changed."

"Giving us a greencard or not giving us a greencard is your right. I fully appreciate it. But why do you rob us of our social security? If you are a fair country, either give us the greencard or refund the social security."

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