Modi to push for pact on social security tax

'Totalisation Agreement' to be discussed

Modi to push for pact on social security tax

Prime Minister Narendra Modi’s meeting with US President Barack Obama will see New Delhi renewing its efforts to ink a pact with Washington to exempt Indian professionals in America from paying social security taxes.

Modi will also convey to Obama New Delhi’s concerns over US Comprehensive Immigration Reforms Bill, which was passed by the Senate last year. If the bill is also passed by the House of Representatives, it will restrict mobility of Information Technology (IT) professionals from India to the US.

Modi is likely to convey to Obama that the US Comprehensive Immigration Reforms Bill is “not only discriminatory, but also seeks to create an unequal playing field for Indian IT companies.

The bill seeks to impose ban on client site placement for the workers with H1B visas, new restrictions on client site placement for the ones with L-1 visas and limits on total percentage of both H1B and L1 workers in the workforce of the US-based companies.

“Any legislation that seeks to selectively apply visa related restriction only against Indian IT business interest in the US would not be in accordance with the spirit of deepening strategic partnership between the two countries and may impact on the common efforts to strengthen economic and trade cooperation that the governments of the two countries are actively pursuing,” an official aware of New Delhi’s stand on the issue said.  

Modi and Obama are also expected to explore ways to end impasse in bilateral parleys for a social security agreement, also known as “Totalisation Agreement”.

A “Totalisation Agreement” between New Delhi and Washington will benefit Indians, who work in America and pay social security and healthcare taxes like other US citizens, but are still unable to avail the benefits.

Nearly 300,000 Indian professionals work in the US. An estimate by Nasscom showed that Indians on H1 and L1 visas pay almost $1 billion in social security taxes in the US every year, but do not get any benefit. Most of them lose their social security contributions, if they do not complete 40 quarters or 10 years of employment in US. 

They have since long been prodding New Delhi to ink the “Totalisation Agreement” pact with Washington, pointing out that many of them return to India. The agreement will exempt Indians working in US from paying dual social security tax on same earnings and help fill gaps in benefit protection.

DH Newsletter Privacy Policy Get the top news in your inbox
GET IT
Comments (+)