India, US to sign pact on social security tax exemptionnews
05 December 2006

Mumbai: India and the United States are exploring the possibility of a `totalisation agreement' that will exempt professionals from either country from social security taxes for short periods of work.

"The issue was discussed with Indian officials. We have agreed that experts from both sides will sit down and hold technical level discussions on harmonising laws on social security on both sides," US under secretary of commerce for international trade Franklin Lavin said.

Indian professionals who go on a short-term visa to the US are required to pay social security taxes of an average 22 per cent of their salary. Once they come back to India they do not get any refund or benefit. A person becomes entitled to the benefit of US social security system only after paying taxes for at least 10 years.

According to the National Association of Software and Service Companies (Nasscom), Indian professionals in the US contribute $300 million every year as social security taxes without getting any benefits.

The two countries are currently holding technical level talks, after which they would decide on the details of the agreement.

India has already signed such totalisation agreement with several countries.

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India, US to sign pact on social security tax exemption