New Delhi
The US has finally agreed to discuss with India differences over a social security tax levied on Indian professionals employed in America -- the first step towards reaching an agreement that could allow Indians working in the US to be repaid social security deposits when their work visas expire, and they return to India, three officials said.
According to an industry estimate, Indians working in the US forfeit almost $1 billion annually in social security tax.
For the first time in almost a decade, the US recently acknowledged that social security tax is a bilateral issue and agreed to discuss it, said the officials cited above, who work in three different ministries, requesting anonymity.
“Last week, (US) commerce secretary Wilbur Ross told commerce minister Piyush Goyal that the issue of social security tax could be discussed. This is certainly an extremely important development that India was trying bring on the table for several years without much success,” one of the officials mentioned above, who works in the ministry of external affairs, said.
Indian workers, particularly information technology (IT) professionals, make social security contributions in the US when they work there, but most of them come back home before they are eligible to withdraw money from their social security contributions. An agreement on the issue would save them this financial loss.
A second person, who works in the commerce ministry, said Goyal raised the matter in a conversation with Ross on July 16 and the US commerce secretary’s response was positive. Ross offered to arrange a meeting between the US Social Security Administrator and Indian officials to discuss the matter and find a possible solution, this person added.
{{/usCountry}}A second person, who works in the commerce ministry, said Goyal raised the matter in a conversation with Ross on July 16 and the US commerce secretary’s response was positive. Ross offered to arrange a meeting between the US Social Security Administrator and Indian officials to discuss the matter and find a possible solution, this person added.
{{/usCountry}}It is expected that a team of Indian officials representing the ministries of external affairs, commerce and labour will take this matter further.
“This has opened up the possibility of initiating exploratory talks. A final solution will emerge after several rounds of talks, which may take several months. But at least we are moving in the right direction,” the first official said.
Prime Minister Narendra Modi brought up the issue in February this year during President Donald Trump’s India visit.
Addressing a joint press conference with the US president at Hyderabad House in New Delhi on February 25, PM Modi had said, “I have requested President Trump that the contribution of our professionals, in terms of social security, should be discussed further within the framework of a totalization agreement. This will be of mutual interest to both of us.”
A totalization agreement is an international tax treaty that seeks to eliminate dual taxation on social security and medicare taxes in the United States.
Shivendra Singh, vice president and head of global trade development at the National Association of Software and Service Companies (Nasscom) , an industry association representing the $180 billion technology industry, said a totalisation agreement would provide huge relief to the Indian employees n the US.
“Further, in order for the negotiations to proceed, as we are told, considering that statute dictates the requirements, the US Congress’s needs to pass legislation to change these regulations.”