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Home > Business > Business Headline > Report

India plans social security pact with US

Suman Guha Mozumder in New York | November 18, 2006 12:15 IST

Overseas Indian Affairs Minister Vayalar Ravi said in New York on Friday that New Delhi is trying to negotiate for an agreement with the Bush Administration under which temporary Indian workers in the US would not have to pay social security taxes.

Talking to a small group of Indian journalists Ravi said during the visit of Belgium prime minister Guy Verhofstadt to India earlier this month an agreement, called social security agreement, was signed with Belgian Foreign Minister under which Indians who would work there for less than five years would have the option of paying their social security taxes in India rather than in Belgium.

'We are also negotiating with the United States for a similar kind of agreement,' Ravi said in response to a question. He said such agreements would also be signed with other European Union countries as well following conclusion of negotiations.

For hundreds of thousands of Indian H1B workers in the US, the mandatory payment of social security tax has been an issue since workers who go back to India after six years of temporary employment in the US either voluntarily or due to lack of sponsorship for permanent residency cannot claim the money they had paid from their earnings. For the permanent residents and citizens, social security acts something like a social insurance program at old age.

Since the 1970s, the United States Social Security Administration has a law in place known as  "Totalization Agreements" with about 20 countries. Under the rule H-1B workers are exempted from paying Social Security taxes in the US and can have their deductions sent to their home countries.

These countries include Austria, Belgium, Canada, Finland, France, Germany, Greece, Ireland, Italy, South Korea, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

Neither India nor China, the two countries accounting for the more than half of the all H-1B workers in the US are not included in the list evidently because these countries have no social security systems.

Ravi, however, did not explain as to how India, which does not have a social security system, would negotiate with the US for a similar exemption for Indian workers.

The minister was in New York ahead of the 5th Pravasi Bharatiya Divas to urge NRIs for greater involvement in the country's development by way of making investments in various projects and fields that are open for investments.

'Indian Americans have one of the highest incomes among all the ethnic groups in this country and they can participate in their motherland's development more substantially if they want to. I am here to encourage them to do that,' he said.

Ravi, who addressed a number of community meetings in New York, is going to California to attend the annual meeting of the National Federation of Indian Association, an umbrella organization of Indian organizations in the US.

During this year's PBD, he said, the Indian government would provide a platform for NRIS to discuss and learn about various projects offered by the states in India. 'We would have a chief ministers forum this time in Delhi where the states would showcase the opportunities for investments in their states and would have an interaction with NRIs,' he said. The forum, he said, would be inaugurated by Congress Party president Sonia Gandhi.

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