Sign Bilateral Totalisation agreement(BTA) with US
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India has been discussing the Totalisation Agreement with the US for a long time now. This is an open issue being negotiated almost over a decade with no real actions or results.
Both sides are negotiating the Bilateral Totalisation Agreement (BTA), which once signed, would benefit thousands of Indians who are working in America and paying social security & Medicare Tax but are unable to get any benefit out of it.
The Totalisation Agreement will exempt Indian professionals working in the US from paying social security and medicare taxes. Currently, residents of the US pay 6.2% social security taxes on wages up to USD 106,800 and 1.45% medicare taxes. Since a lot of us return to India before we retire, we will never see the payouts of these contributions.
Why this Petition?
This is a petition to Sushma Swaraj, External affairs minister of India and other authorities to let them know that, not having a Totalisation Agreement is a pressing issue for all the NRIs in America and in turn India itself. It cannot take a decade long to negotiate and sign the Bilateral Totalisation Agreement. Signing this treaty should be on top of their agenda in US-India Strategic parterneship.
What is Totalisation Agreement anyway?
A Totalisation agreement is a bilateral treaty between two countries that integrates the social security laws of two countries. The purpose of the totalisation agreements is to eliminate double social security taxation on citizen/residents of India who are posted to foreign countries like US and second, to allow workers who divide their careers between India and a foreign country to continue to be covered under India’s social security system.
The US currently has Totalisation Agreements with 24 countries, the only two Asian countries being South Korea and Japan. India has signed social security agreements with Belgium, France, Germany, Switzerland, Luxembourg and the Netherlands in the recent past.
India has signed Totalisation Agreements with several European countries, whose social security systems are different from the Indian system and from the US system. As such, the differing systems of social security should not be an impediment in signing of the agreement between the two countries.
The Pressing issue/ problem
According to government sources, there are 300,000 Indians working in the US and they lose their social security contributions if they do not complete 10 years (40 quarters) of employment in US. According to NASSCOM, Indians on H1 and L1 visas pay almost $1 billion in social security taxes in the US annually, without getting any benefits
Post globalization, since 2004, Washington and New Delhi have been pursuing a strategic partnership that is based on shared values and numerous economic, security, and global initiatives. The value of all bilateral trade tripled since 2004 and continues to grow, while significant two-way investment also growing and is flourishing in economics, trade, and agriculture, energy and climate change, education and development, science, technology, and innovation.
So then, why is it so difficult to sign this totalisation agreement treaty?
Consider an example of an NRI making $90,000 a year in US would pay around $5500 as Social Security tax (6.2% social security taxes) That adds up over the years of stay in US and it’s a significant amount. What are the benefits we get for paying that tax ? Nil, no benefits since most of us just do not know whether we will work in US for 10yrs or will retire here.
Benefits from the Totalisation Agreement
If India and US comes to an agreement and signs the Totalisation Agreement. We could see these benefits listed below
1) Repatriation of the payments made by the employees to their provident fund accounts in India.
All the Social Security taxes that we have paid in US so far will be transferred to Indian EPFO (Employees’ Provident Fund Organization) scheme which runs Provident Fund, a pension scheme and an insurance scheme.
Note : Not to mention the benefits the Indian economy would have if the treaty is signed. I am not going into those details. It’s for you to figure it out ;-)
2) Enable direct taxation by Indian government
Have the Social Security taxes deducted directly by Indian government. NRIs in US would still continue to pay the Social security not to US but to India directly. All the deductions will be added to individual’s PF account.
Note : Actual benefits will defer based on the Agreement itself
The Social Security Law says
“Unless specifically exempt by law, all earnings from employment in the United States--including earnings of citizens of other countries -- are covered under Social Security and are subject to Social Security taxes. These taxes must be paid even though the taxpayer does not expect to derive any benefit from them."
Normally, a person cannot withdraw his or her Social Security taxes, even when no benefits are payable. The Social Security taxes paid on a worker's earnings are not placed in an individual worker's account but are pooled in special funds from which benefits are paid to eligible workers and their families."
Appeal to all the Indians in US
is that Sign the petition if you agree, make our voices heard. It will be heard if it’s loud. Sign the petition and share this with your friends and family. It is this treaty which will help us and the generations to come.
Statistical data and other information gathered online from reliable sources like news articles, NASSCOM, personal experience & debates.
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