The Hindu : Business : Indo-US totalisation pact on anvil

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Wednesday, Dec 06, 2006
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Indo-US totalisation pact on anvil

Special Correspondent

Relief to Indian professionals on short-term visas to U.S.

— PHOTO: AFP

RELIEF IN SIGHT: Indo-American Chamber of Commerce National President, Deepak Pahwa (left), presents a memento to the U.S. Under Secretary for International Trade, Franklin L. Lavin, at a meeting in New Delhi on Tuesday.

NEW DELHI: India and the U.S. will explore the possibility of a Totalisation Agreement, exempting professionals from both countries from social security taxes for short work durations. Disclosing this here on Tuesday, the visiting U.S. Under Secretary for International Trade, Franklin Lavin, said the issue had been discussed with the Indian Government.

(A totalisation agreement involves taking into account or linking social security taxes payable and benefits enjoyable by migrant workers in their home country as also host country).

Mr. Lavin said it had been agreed that experts from both sides would hold technical level discussions on harmonising laws on social security of the two countries. Subsequently, he said, India and the U.S. would decide on the details of the agreement.

Such an agreement is expected to provide considerable relief to Indian professionals going on short-term visas to the U.S. They are required to pay social security taxes, amounting to about 22 per cent of their salary, but are not entitled to any refund or benefit. Under the U.S. social security system, people become entitled to benefits only after paying taxes for at least ten years.

According to estimates of the National Association of Software and Service Companies (Nasscom), Indian professionals in the U.S. contribute $300 million every year as social security taxes without getting any benefits. India had already signed such Totalisation Agreements with several countries including Belgium.

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