India, US likely to ink Totalisation Accord
The agreement will exempt professionals of both the countries from social security taxes when they go to work for a short period in the other country.india Updated: Dec 05, 2006 21:08 IST
India and US have agreed to explore the possibility of a Totalisation Agreement that will exempt professionals of both the countries from social security taxes when they go to work for a short period in the other country.
"The issue was discussed with Indian officials. We have agreed that experts from both sides will sit down and hold technical level discussions on harmonising laws on social security on both sides," US Under Secretary of Commerce for International Trade Franklin Lavin said.
After the technical level talks, India and US would decide on the details of the agreement.
Indian professionals who go on a short-term visa to the US are also required to pay social security taxes that come to an average of 22 per cent of their salary.
Once they come back to India they do not get any refund or benefit. A person becomes entitled to the benefit of US social security system after paying taxes for at least 10 years.
According to estimated of National Association of Software and Service Companies (Nasscom), the Indian professionals in US contribute $300 million every year as social security taxes without getting any benefits.
India has already signed such Totalisation Agreement with many countries, the latest one being Belgium. US have also concluded such agreements earlier.