All you need to know about Provident fund for International Workers

Provident Fund is a retirement benefits scheme for employees which is compulsory and managed by Government. Employees contribute every month a part of his/her savings in their pension fund. These monthly savings amounts get collected each month and can be entered as a lump sum amount at the time of retirement or completion of employment. If the Provident Fund amount consists of a bit of saving, then it can be used to proceed with retirement corpus.

In this article, we will be discussing regarding the provident fund for international workers. So read on to find out.

Key summary of Employees Provident Fund

It is a decretive body of the Government of India under the Ministry of Labor and Employment. It administers compulsory Contributory Employees Provident Fund (EPF), pension and an insurance plan for the Indian workforce. It is one of the biggest community protection units in the world in terms of members and volume of financial transactions.

Who are International Workers?

Indian Government via its initiative for the advantage of both employers and employees has entered into an Agreement with various countries to secure that employees of the home country do not leave a contribution in that country, take the advantage of tantalization term for deciding the eligibility for pension, may be able to get the pension in the country where they choose to exist and making double social security contributions by the employers for the same set of employees. Employees PF Organization has been authorized to issue the Certificate of distribution to the employee employed to the countries having signed an Agreement with the Indian Government.

How much is the contribution of Provident Fund for International workers?

Contribution of 12% of their salary is compulsory for both employees and employer. Exemption to contribute for employees earning more than Rs. 6,500 per month does not apply to IWs. In addition, employers are also mandated to pay the same amount, that is, 12 percent of their salary as their contribution to the scheme.

What is Social Security Agreement (SSA)?

A bilateral agreement between India and a foreign country designed to preserve the interests of cross-border workers is

. It provides avoidance of ‘double coverage’ and ascertains similarity of remedy to workers of both countries from a social security plan.

What are the Benefits of Provident Fund for International workers?

• Employee Provident Fund scheme provides pre-determined interest on the amount deposited with EPF India. Additionally, awards were given at maturity ensure an increase in employees’ funds and accelerate capital appreciation.
• Approximately 8.33% of the employer’s contribution is directed towards the Employee Pension Scheme. In the long run, the deposits towards the Employees Provident Fund help to create a healthy retirement fund. Such retirement will expand financial security and a sense of independence for them after retirement.
• Uncertainties are a part of life. Therefore, it is good to be financially prepared to face such undesirable situations that a person can cope with the exhibition. The EPF Fund acts as an emergency fund when an individual needs emergency funds.
• Under Section 80C of the Indian Income Tax Act, an employee’s contribution to his Employees Provident Fund account is considered eligible for tax exemption. Income generated through the EPF scheme is exempt from taxes. The benefit of such exemption is Rs. 1.5 Lakh can be taken to the extent.
• The tax benefits applicable to the Employees Provident Fund Scheme ensure greater income to the members. This improves long-term savings and a person’s purchasing power.
• EPF India members are entitled to avail partial withdrawal. Individuals can withdraw funds from their Employer Provident Fund account to meet their specific needs such as pursuing higher education, building a home, meeting wedding expenses or availing medical treatment.

How much is the exemption of Provident Fund for International workers?

International Workers get exemption from contribution for Employees Provident Fund only if their home country has a

or economic-bi-partisan treaty with India.

What is the withdrawal rules under EPF?

An international worker can withdraw the balance in an EPF account in the following situations:

1. At the time of retirement, that is, at or after the age of 58 years;

2. To work in case of retirement due to permanent and total mental or physical disability;

3. In matter of serious illness such as leprosy, cancer or tuberculosis; or,

4. On completion of Indian employment, if IW has SSA with India at home.

The facility of obtaining PF refund on the date of completion of Indian employment is not available for IWs who are not covered under SSA.

It is challenging for migrants belonging to non-SSA countries and working in India, as their provident fund is closed till attaining the age of 58 years. In addition, IWs can only withdraw funds to an Indian bank account, post-retirement – making the entire withdrawal process practically more difficult.

Conclusion

EPF comes under the Employees Provident Fund and Miscellaneous Laws Act, 1952. EPF is the best savings scheme for creation of adequate retirement fund for salaried employees. At the moment of the career, many times a job is changed. But, the benefit of this plan is added continuously under the UAN. EPF can be a good investment plan as it comes with tax benefits. It achieves higher income and improves savings for employees in the long term.

Foreign employees taking foreign account assignments pay more attention to the country’s tax system when determining costs, and often ignore the country’s social security laws, which are equally important.

India requires all business organizations employing more than 20 workers to record with the National Community Safety System, and it is mandatory for employees and employers to contribute by retirement and insurance plans.