PF withdrawal made easier for ‘international workers’

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SummaryThe concept of ‘international worker’ was introduced as a special category in the Indian Provident Fund Scheme for the first time in October 2008, requiring foreign nationals working in India to contribute towards the Provident Fund.

The concept of ‘international worker’ was introduced as a special category in the Indian Provident Fund Scheme for the first time in October 2008, requiring foreign nationals working in India to contribute towards the Provident Fund. Back then, the rules relating to contribution and withdrawal were same for them as for the local employees. Then, in September 2010, restrictions were imposed on the withdrawal from Provident Fund for ‘international workers’ until they reach the age of 58 years. Now, last month, there was a partial roll-back on the restrictions to withdraw from Provident Fund for them.

‘International workers’, covered under a social security agreement entered into between India and another country, will now be allowed to withdraw their contributions from the Provident Fund on termination of employment with the Indian employer. As of now, India has eight social security agreements in force — with Belgium, Germany, Switzerland, Luxembourg, France, Denmark, Korea and the Netherlands.

For example, Phil, an alpha geek from France, was seconded by his home entity on April 1, 2010, for 30 months assignment to work in India. As on April 1, 2010, there was no existing social security agreement between India and France. Therefore, Phil was mandatorily required to become a member of the Provident Fund in India as an ‘international worker’. The social security agreement between India and France is operative from July 1, 2011. Since then, Phil, an existing member of social security scheme in France obtained a certificate of coverage in France and was no longer required to contribute to the Provident Fund in India.

Now, after the recent change, Phil will be eligible to apply for withdrawal of his Provident Fund contributions while repatriating on completion of his assignment in India. The change will benefit all foreign nationals who have contributed to the Provident Fund in India before the social security agreement between their home country and India came into force.

However, foreign nationals on assignment from countries with whom India has not entered into a social security agreement will still be eligible to withdraw from the Provident Fund on retirement after reaching the age of 58.

Another change in the rules now allows ‘international workers’ to claim withdrawal from the Provident Fund either into their bank account directly or through the employer. Previously, ‘international workers’ were required to hold an Indian bank account to claim a withdrawal from the PF. It may no longer be mandatory

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