Hello,
Provident Fund law for International Workers
Whenever there is a social security treaty between two countries, a certificate of coverage entitles an individual, moving on assignment between the two countries, to be covered under the home country social security and claim exemption from host country social security. It means you could claim exemption from that country social security(like PF Act of that country) under the said treaty between India and the said country.
Under the Indian Provident Fund (social security) law, an Indian employee having worked or going to work in a foreign country with which India has entered into a social security treaty is termed as an "International Worker".This means that if India and the country where Mr.A is going, do not have this social security treaty, then Mr.A will not be called as International Worker. Special provisions have been carved out in the Provident Fund law for International Workers.
One of them is that unlike a local employee who is entitled to withdraw provident fund money two months after leaving employment (provided he is unemployed or employed in an uncovered company during those two months), an international worker can withdraw provident fund money only after retirement or attaining 58 years of age, whichever is later.
The other one is that unlike a local employee for whom only a miniscule portion of total contribution (8.33% of Rs. 6,500 only) goes to pension scheme, for an international worker, a substantial portion of total contribution (8.33% of monthly pay) goes to pension scheme. Benefit from pension scheme is available only as annuity (on monthly basis) after retirement.
Clarification through a circular:
"The Indian nationals are to be treated as International Workers with effect from the date of commencement of certificate of coverage issued by Employees Provident Fund Office, Head Office. The member will continue to be an International worker till the final settlement is made in accordance with provisions of the scheme."
In simple terms, it would mean that an Indian national going to work in a country with which India has entered into a social security treaty will continue to remain as an international worker even after completion of his overseas assignment. So that means he cannot withdraw the amount till he attains age of 58!
Regards,
Subhash.
CAclubindia
