Expat Social Security Obligations in India: Are You Claiming These Benefits?

Expat Social Security Obligations in India: Are You Claiming These Benefits?

Social Security Benefits & Obligations of Expat Employees in India

Social security obligations are an essential aspect of employment law that governs the rights and obligations of employees and employers with respect to social welfare benefits. In India, expatriates or foreign nationals who work in the country are also subject to certain expat social security benefits & obligations like Indian employees. These obligations are in place to ensure that such employees receive the necessary social welfare benefits for expats in India, including healthcare, pension, and other related benefits. Before understanding the social security benefits & obligations for expats, let’s see what expats actually mean.

Expatriates in India

Expatriates, also referred to as foreign nationals, are individuals who reside and work in a country other than their country of origin. In India, expatriates are generally employed by multinational corporations, foreign-owned companies, or Indian companies that have operations in other countries. This also includes planned arrangements between the Indian entity and its foreign counterparts whereby the employees from the foreign entity are deputed to India.

The Indian government has implemented several policies and regulations to attract foreign investment and encourage expatriates to work in the country. These policies have resulted in an increase in the number of expats working in India over the years.

Social Security Obligations for Expats in India

India has entered into various Social Security Agreements (SSA) to ease out and streamline the expat social security obligations for cross-border and international workers. When discussing the social security obligations in case of expats in India, the definition of International Worker holds prime importance. International Worker (IW) means-

  1. An Indian employee having worked or going to work in a foreign country with which India has entered into a social security agreement (SSA) and is eligible to avail of the benefits under the social security programme of that country, by virtue of the eligibility gained or going to gain, under the said agreement.
  2. An employee other than an Indian employee, holding other than an Indian Passport, working for an establishment in India to which the EPF & MP Act, 1952 applies.

However, the following category of expats should not be considered as International Workers (IWs) as they fall under the Excluded Employees category:

  1. National of a country with which India has entered into an SSA and the expat is duly issued with a Certificate of Coverage (COC) by his/her home country.
  2. If the expat is deputed from a country or a region with which India has entered into a bilateral comprehensive economic agreement.

Excluded employees can contribute to the social security benefits of their country. They can obtain a certificate from their company in the home country that the company will comply with the social security obligations of the home country. This will exempt them from complying with the social security obligations in India. This ensures that their benefits are not hindered in case they decide to leave their employment or return to their home country.

Expatriates working in India are subject to several expat social security obligations. These obligations include the payment of various social welfare contributions, such as:

  • Employee Provident Fund (EPF): The EPF is a retirement benefits scheme that requires employers to contribute 12% of an employee's basic salary towards a retirement fund. The Indian entity is responsible to make contributions in relation to the foreign nationals employed by it. All the foreign nationals who are working in EPF-covered establishments in India shall be considered as International Workers. However, those coming from an SSA country and carrying a duly issued COC are not required to contribute to the EPFO. The employer is responsible for deducting this amount from the employee's salary and depositing it into the employee's EPF account. Further, there is no wage ceiling applicable in the case of IWs.
  • Pension: The pension scheme is a retirement benefit that provides a monthly pension to employees who have completed a certain number of years of service with an employer. Employers are required to contribute 8.33% of the employee's basic salary towards the pension fund. 
  • State Employment Laws: Apart from the above, employers should also comply with the respective state employment and labour laws where the company is situated. 

In a Nutshell

Social security obligations for expats are a crucial aspect of employment law in India that expatriates must comply with. Expats working in India are subject to various social welfare contributions that provide a conducive environment for expats to work in India. Further, the concept of International Workers and Excluded Employees provides the expats with an option to opt out of these benefits providing them with much-needed flexibility.

However, whether an organisation or an expat is eligible and liable for social security obligations or not varies on a case-to-case basis. Thus, it's important to consult professionals who are well-versed in employment and labour laws in India. In case you need any assistance in relation to social obligations for expats in India, feel free to contact the ASC Group.

Also Read - Income Tax implications in the Case of Expats in India


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