US open to talks on security tax burden on Indian professionals

nNEW DELHI: The US has finally agreed to discuss with India differences over a social security tax levied on Indian professionals employed in America -- the first step towards reaching an agreement that could allow Indians working in the US to be repaid social security deposits when their work visas expire, and they return to India, three officials said. According to an industry estimate, Indians in the US forfeit almost $1 billion annually in social security tax. For the first time in almost a decade, the US acknowledged that social security tax is a bilateral issue and agreed to discuss it, said the officials cited above, who work in three different ministries, requesting anonymity.

“Last week, (US) commerce secretary Wilbur Ross told commerce minister Piyush Goyal that the issue of social security tax could be discussed,” one of the officials, who works in the ministry of external affairs, said.

Indian workers make social security contributions in the US when they work there, but most of them return home before they are eligible to withdraw money from their social security contributions. A second person, who works in the commerce ministry, said Goyal raised the matter in a conversation with Ross on July 16 and the latter’s response was positive. It is expected that a team of Indian officials representing the ministries of external affairs, commerce and labour will take this matter further.

Prime Minister Narendra Modi brought up the issue in February during President Donald Trump’s visit. He had said, “I have requested President Trump that the contribution of our professionals, in terms of social security, should be discussed within the framework of a totalization agreement.”

A totalization agreement is an international treaty that seeks to eliminate dual taxation on social security and medicare in the US. Shivendra Singh, vice president and head of global trade development at the National Association of Software and Service Companies (Nasscom) , said a totalization agreement would provide relief to the Indian employees in the US. “The US Congress needs to pass legislation to change these regulations,” he said.