India, UK discuss social security agreement
The move comes as two nations are keen to bolster their post-Brexit engagement
India and the UK are again discussing a social security agreement that will allow Indian IT firms to avoid paying mandatory national insurance for their overseas Indian staff. The move is aimed to help Indian tech companies who have employees working in the UK and end up paying social security in both India and the UK, said a report by LiveMint.
At the 14th Joint Economic and Trade Committee meeting held last month, the two sides agreed to establish an “enhanced trade partnership” which came as the first step in a roadmap to a UK-India free trade agreement, the report said.
There are two broad strategies on which the partnership is based on - one involves addressing and removing non-trade barriers such as for high skilled professionals in the UK and the other visualizes identifying tariff barriers, the report quoted UK-India Business Council chief executive officer Jayant Krishna as saying.
National insurance in the UK is a contributory tax paid by all UK residents, ensuring access to free health, education, access to a pension, maternity benefit, jobseeker’s allowance, and support allowance in case of illness and disability when an individual is unable to work.
An Indian employee on a limited-period intra-company transfer visa is, however, not able to benefit from the insurance as the minimum period of such contribution to gain entitlement to the state pension is 10 years, said the report.
“A 10-year contribution for pension entitlement mostly means forfeiting the entire amount paid in. In India, the Indian IT-ITeS companies also have to contribute towards social security for their employees. This barrier needs to be addressed by the UK," the LiveMint report quoted Krishna as saying.
An estimated number of 60,000 to 75,000 professionals of Indian tech companies are working in the UK. According to an industry estimate, the loss of contribution due to social security deposits is approximately GBP 250 million per annum, said the report.