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Employees’ Provident Fund Organisation issues new circulars to secure proper compliance in respect of International Workers

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In October 2008, Government of India had made fundamental changes in the Employees’ Provident Funds Scheme, 1952 (EPFS) and Employees’ Pension Scheme, 1995 (EPS) by bringing International Workers …

In October 2008, Government of India had made fundamental changes in the Employees’ Provident Funds Scheme, 1952 (EPFS) and Employees’ Pension Scheme, 1995 (EPS) by bringing International Workers (IWs) under the purview of the Indian social security regime.
Later, some more changes were made regarding contributions, benefits and compliances for IWs.

Recently, Employees’ Provident Fund Organisation (EPFO) has issued two circulars for securing proper compliance in respect of International Workers.

The two circulars issued by EPFO pertain to:
1) Reconciliation of International Workers data with the office of Foreigners Regional Registration Office.
2) Introduction of a revised application form for obtaining a ‘Certificate of Coverage’ under Social Security Agreements with various countries.

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  • 1. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG FLASH NEWS KPMG IN INDIA Employees’ Provident Fund Organisation issues new circulars to secure proper compliance in respect of International Workers 3 April 2014 Background In October 2008, the Government of India (GOI) had made fundamental changes in the Employees’ Provident Funds Scheme, 1952 (EPFS) and Employees’ Pension Scheme, 1995 (EPS) by bringing International Workers (IWs) under the purview of the Indian social security regime. Later, some more changes were made regarding contributions, benefits and compliances for IWs. Recently, the Employees’ Provident Fund Organisation (EPFO) has issued two circulars for securing proper compliance in respect of International Workers. The two circulars issued by EPFO pertain to:  Reconciliation of International Workers data with the office of Foreigners Regional Registration Office (FRRO).  Introduction of a revised application form for obtaining a ‘Certificate of Coverage’ (COC) under Social Security Agreements (SSA) with various countries. Guidelines provided in the circulars 1) Reconciliation of International Workers data with the office of Foreigners Regional Registration Office (FRRO) EPFO has directed its officials to coordinate with the respective FRROs to obtain the list of foreign nationals employed in establishments covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act).
  • 2. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Our comments These circulars are a continuation of EPFO’s effort to tighten its enforcement machinery and to identify the Indian employees who qualify as IWs and to monitor non-compliance in respect of expatriate employees under the EPF Act. The changes in the COC application form will help the Provident Fund authorities in identifying the Indian employees who will be considered as IWs. Since the employers have to identify whether an outbound employee will be considered an Indian worker or an International worker, therefore companies would need to exercise a greater vigil on their international assignments for ensuring proper compliances of IWs under the EPF Act. . Source: http://www.epfindia.com/Circulars/Y2014- 15/IWU_FRRO_IntlWorker_23.pdf http://www.epfindia.com/Circulars/Y2013- 14/IWU_COC_Revised_27300.pdf EPFO has further asked its officials to reconcile the FRRO data with the IW-1 return filed by the employers and to ensure proper compliance in case of evasion in respect of IWs. 2) Introduction of a revised application form for obtaining a ‘Certificate of Coverage’ (COC) under Social Security Agreements with various countries. India has signed SSA with other countries with a view to getting exemption from Social Security contribution in the host countries for outbound employees, provided they contribute to Social Security in India. To obtain the exemption, an outbound employee requires a COC from EPFO which serves as a proof of social security contribution in India. In order to obtain COC, outbound employees have to submit an application form to the Provident Fund office. Now, EPFO has revised the COC application form. In the new application form, EPFO has changed the joint undertaking by employer and employee. The amended undertakings are as follows: a) “The employer shall continue to contribute in respect of this employee in India as Indian Worker/ International Worker*, as the case may be, during the period of posting in __________”. *Please strike off, whichever is not applicable. b) “That the applicant has worked/not worked* in a foreign country with which India has entered into a Social Security agreement and he/she is eligible/ not eligible* to avail benefits under a social security programme of that country, by virtue of the eligibility gained, under the said agreement * Please strike off, which is not applicable The above circular clarifies that an outbound employee will be entitled for COC whether or not the employee has earlier worked in a country with which India has an SSA. However, PF contribution will be made as IWs if the applicant has worked in a foreign country with which India has entered into an SSA and the applicant has become eligible to avail the benefits under the social security programme of that country, under the said agreement.
  • 3. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity“are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. www.kpmg.com/in Ahmedabad Commerce House V, 9th Floor, 902 & 903, Near Vodafone House, Corporate Road, Prahlad Nagar, Ahmedabad – 380 051 Tel: +91 79 4040 2200 Fax: +91 79 4040 2244 Bengaluru Maruthi Info-Tech Centre 11-12/1, Inner Ring Road Koramangala, Bangalore 560 071 Tel: +91 80 3980 6000 Fax: +91 80 3980 6999 Chandigarh SCO 22-23 (Ist Floor) Sector 8C, Madhya Marg Chandigarh 160 009 Tel: +91 172 393 5777/781 Fax: +91 172 393 5780 Chennai No.10, Mahatma Gandhi Road Nungambakkam Chennai 600 034 Tel: +91 44 3914 5000 Fax: +91 44 3914 5999 Delhi Building No.10, 8th Floor DLF Cyber City, Phase II Gurgaon, Haryana 122 002 Tel: +91 124 307 4000 Fax: +91 124 254 9101 Hyderabad 8-2-618/2 Reliance Humsafar, 4th Floor Road No.11, Banjara Hills Hyderabad 500 034 Tel: +91 40 3046 5000 Fax: +91 40 3046 5299 Kochi 4/F, Palal Towers M. G. Road, Ravipuram, Kochi 682 016 Tel: +91 484 302 7000 Fax: +91 484 302 7001 Kolkata Unit No. 603 – 604, 6th Floor, Tower – 1, Godrej Waterside, Sector – V, Salt Lake, Kolkata 700 091 Tel: +91 33 44034000 Fax: +91 33 44034199 Mumbai Lodha Excelus, Apollo Mills N. M. Joshi Marg Mahalaxmi, Mumbai 400 011 Tel: +91 22 3989 6000 Fax: +91 22 3983 6000 Pune 703, Godrej Castlemaine Bund Garden Pune 411 001 Tel: +91 20 3050 4000 Fax: +91 20 3050 4010