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IMPACT – MEDIUM
What is the change? As part of the employment visa process, India now requires that employers provide their Employees’ Provident Fund Organization identification number.
What does the change mean? Employers must enter their EPFO identification number on employment visa applications. Foreign nationals from countries exempt by a social security agreement must provide other evidence.
Background: The EPFO number is required on the application for employment visas at Indian missions. EPFO and establishment numbers are also requested at the time of registration at Foreigner Regional Registration Offices and for visa extensions in-country (although they are optional and not mandatory).
The EPFO, India’s social security system, has recently become more vigilant in making sure companies are complying with their legal obligations to contribute to the fund, especially companies employing foreign workers. Employers and employees must each contribute 12 percent of an employee’s monthly salary to the fund and employers must pay 1.61 percent in administrative costs.
Foreign workers from countries covered by a social security agreement with India are exempt from contributing to the fund. Those countries currently include Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Luxembourg, the Netherlands, South Korea, Sweden and Switzerland. Other countries have signed agreements but are awaiting ratification. Foreign workers who are exempt from EPFO contributions will be required to submit a certificate from the home country’s social security authorities to show they are covered by the home country.
BAL Analysis: Companies should be aware that this is one of several recent steps toward data-sharing between various Indian government agencies to better monitor compliance with the Provident Fund system.
This alert has been provided by the BAL Global Practice group and our network provider located in India. For additional information, please contact your BAL attorney.
Copyright © 2016 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@bal.com.
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