This story is from November 21, 2006

'Wanted: India-US totalisation treaty'

Parul Chhaparia / TNN / Nov 21, 2006, 23:48 IST

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For those working in US and worried about their social security taxes, here is a reason to be relieved.

NEW DELHI: For those working in US and worried about their social security taxes, here is a reason to be relieved. The Indo-American Chamber of Commerce (IACC) too has joined the chorus of those seeking an India-US totalisation agreement to help Indian professionals lose the social security when they leave America without completing the specified tenure.
At present, Indians working in US, even on a short-term basis, need to pay social security taxes in both India as well as US.The tax, which can be used for future uncertainties, in US, comes to about 12%-13% of the total salary of an employee. But, one can avail this benefit only after 10 years of stay in US.
But most Indian professionals working in US are on short term visa — up to five years — and are therefore unable to meet the stipulation. The social security taxes paid by such employees is forfeited. According to an estimate, the total forfeited sum comes to about $1 billion annually.
"The treaty, when signed, would require professionals to pay social security taxes only in home country and will help thousands of Indian professionals working in US on short-term assignments," says Deepak Pahwa, IACC president.
The proposed pact is similar to the 'Totalisation Agreement' that US has signed with many other nations, under which an employee pays social security tax only in home country.
IACC, alternatively, also proposes that if totalisation is not possible, India can sign a treaty similar to the one it has signed with Belgium. "Under the pact, a time-limit has been fixed. If a person works there for five years, at the end of his contract-period, he can reimburse the sum he has paid as social security tax," says Pahwa.

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