India will press with the US during President Barack Obama's visit here next week for a social security pact aimed at providing relief from double taxation to over one lakh Indians working there who pay nearly $ one billion annually as social security tax.
Indian professionals, including H1B visas holders, in the US pay over $ 1 billion annually as social security tax and if the pact gets through then it will relieve them from paying the tax if they have already made a similar payment in India, a senior official in the Ministry of Overseas Indians told PTI.
"We have already conveyed to the US side that negotiations on the issue should be started at the earliest. There may be some reference also about it in the joint declaration likely to be issued during Obama's visit," the official said.
If the pact comes through, then Indian professionals working in the US on short term contract up to five years will not require to make any social security contribution provided they continue to make the payment in India.
The US has not been forthcoming in signing such a pact with India as US gets over $ one billion as social security tax from the Indians working. However, top Indian IT companies including Infosys and TCS have been pushing for such a pact with the US.
"Compared to Indians working in the US, the number of American professionals working here is very less. So US feels the pact will only benefit India but we have argued that as nuclear commerce with US expands, lot many US professionals will require to work here and they will also be benefited from the pact," the official said.
Although informal negotiations on the pact have been going on between the two sides, formal deliberations are yet to begin.
"There are indications that formal negotiations will begin following Obama's visit," said the official. Obama will be in New Delhi on November 7 and 8 during which he will meet Prime Minister Manmohan Singh and other leaders.
India has already signed similar agreements with Belgium, Germany, France, Switzerland, Netherlands, Luxembourg, Hungary, Denmark, Czech Republic and the Republic of Korea. On Friday, India signed a social security pact with Norway.
Officials said in most of the social security pacts India has signed, there is a provision allowing the country's professionals to transfer their social security benefit if they relocate to India or a third country after the completion of their service in the foreign country.
However, Overseas Indian Affairs Minister Vayalar Ravi maintained that it will take some time to finalise such a pact and it will not be signed during Obama's visit.