Employee Provident Fund acts as a saving tool for the employees and helps them to plan their expenses smoothly and also allowing them to avail loans against their PF account. But are these benefits available for those employees who leave India to complete the overseas assignment? Moving outside India will require you to undertake numerous compliances in multiple jurisdictions including meeting the applicable tax, regulatory, labor, and other laws. Here is FinanceShed with a complete guide on Employees Provident Fund and its norms for those leaving India for employment.
Employees Provident Fund payment is not payable by any employee, including a foreign employee of a company who is otherwise not liable to PF. These provisions are governed under The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. This exemption is applicable for certain criteria such as employee’s number not more than 20 in a particular organization. Investing is all about planning and having a risk taking approach in order to get higher returns. Here are some long term investment options you can plan off for.
Fundamental Points Governing Provisions
The accumulated balance in the Employee Provident Fund Account is can be transferred to the next employer freely. Over the years, whatever the contributions have earned an interest of over 8% and are exempt from tax subject to certain limits. The regulations regarding Provident Funds will be relevant with respect to total salary irrespective of the fact whether the salary is remunerated in India or outside India. Also, other aspects of remuneration do not affect the provisions. Also, every international worker has to get himself registered from the first date of his employment in India. All the provisions are applicable to eligible employees unless he/she qualifies as an “Excluded Employee.”
Provident Fund Norms For International Workers
When an employee is sent outside India for completing any assignment or as a deputation and where the employer-employee relationship remains intact, then he/she would be under an obligation to continue the social security contributions in India. This kind of scenario results in a dual contribution as the employee also has to contribute to the social security schemes in the host country. The employee can withdraw the amount of accumulated balance by following certain criteria.
Norms When An Employee Has Rendered Less Than 5 Years Of Continuous Service In India
The employer’s contribution to provident fund and the interest thereon would be fully taxable as salary income out of the total accumulated amount. The employee’s contribution would be taxable to the extent of the deduction claimed in earlier years. The interest so earned on this contribution would be taxable as income from other sources in the hands of the employee.
Norms When An Employee Has Rendered More Than 5 Years Of Continuous Service In India
The accumulated balance including employee’s contribution, employer’s contribution and interest thereon shall be exempt from tax in India as per the prevailing tax laws. Employees who do not leave India for completing any assignment but leave on cessation of their Indian employment contract can continue to leave the corpus invested. Interest would be credited annually on the balance till the time the corpus is maintained and ceases when the same is ended.