The Employees’ Provident Fund Organisation (EPFO) has released detailed instructions regarding the exemption process under the recently activated India-UK Social Security Agreement. This pivotal agreement, also known as the Double Contribution Convention (DCC), came into effect on July 15, alongside a broader Comprehensive Economic and Trade Agreement.
The primary aim of the DCC is to provide significant relief to workers by ensuring they contribute to social security in only one country, rather than both their home and host nations. Under this provision, employees from India dispatched by their employers to work in the UK are exempt from making social security contributions in the UK, provided their deployment does not exceed 60 months, or five years.
How to Avail the Exemption
To benefit from this exemption, eligible employees, through their employers, must apply for a ‘Certificate of Coverage’ (COC). The EPFO has confirmed that its regional offices will be responsible for issuing these certificates. Similarly, the HM Revenue and Customs handles COC issuance in the UK for British workers.
The EPFO has emphasized that regional offices must take prompt action to issue COCs upon receiving complete applications. This streamlined procedure is designed to ease the burden on international workers.
Impact and Benefits
The implementation of the DCC is expected to provide substantial financial relief to approximately 9,000 employers and 75,000 Indian employees currently working or planning to work in the United Kingdom. Previously, these workers faced a significant financial strain, contributing an estimated 25% of their salary to the UK’s National Insurance System and an additional 24% to the EPFO in India. This double contribution was often viewed as a 'sunk cost' or a form of double taxation.
India currently maintains similar social security agreements with 21 other nations, including Belgium, Portugal, and the Netherlands, facilitating smoother international employment for its citizens.