Indian Workers In The US Call For Haste On Tax Agreement

by Mike Godfrey, Tax-News.com, Washington

19 September 2002

The Financial Express reported on Wednesday that the Indo-American Chamber of Commerce (IACC) has called for the finalisation of a taxation agreement between India and the United States, in order to protect the income of Indian workers temporarily resident in the US.

Under current rules, foreign nationals working in America are obliged to contribute a substantial portion of their earnings in social security taxes, but are unable to avail themselves of the benefits of the system until they have been resident in the country for ten years.

This provision has proved problematic - and expensive - for many Indian workers, especially those in the software industry, who are often called upon to relocate to the United States, but whose H1-B visas only allow them to stay in the USA for a maximum of six years.

However, speaking to the Financial Express this week, Vinod Chandiok, President of the IACC announced that the Chamber has taken up the issue with the relevent authorities in India, and expressed the hope that bilateral agreement on the draft tax bill can be reached soon:

'[The] Tax avoidance treaty on social security, known as [the] Totalisation Agreement, will enable Indian nationals working in the US to save substantial amounts since they would not be legally bound to contribute towards the social security tax which is upwards of 21% of the total earnings of an employed or self-employed person in the US,' he explained on Wednesday.

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