EPFO TO Challenge HC Ruling Against Inclusion of Foreign Workers Under Its Ambit

The Employees’ Provident Fund Organisation is likely to challenge a Karnataka High Court ruling which held the inclusion of international workers under its fold as unconstitutional, said a senior government official.

In a recent judgement, the high court termed the EPF scheme provisions covering ‘international workers’ unconstitutional if international workers earning several lakhs are required to contribute to provident fund on their full salary, whereas the contribution is capped at ₹15,000 for Indians working overseas.

India has more than 150,000 expatriates, with a large number of them from countries, including the US and UK, with which India does not have a social security agreement. Expats from these countries working in In- dia are subject to provident fund deductions on their full salary.

“The EPFO is actively evaluating the course of action in response to this judgement,” the retirement fund body said in a statement on Tuesday.

According to the official, in its appeal against the judgement, the EPFO is likely to point out the special provisions for international workers, cine workers and those working in newspaper establishments. “Besides, classification of employees based on salary drawn has been upheld in standards of test of classification in the earlier verdicts,” the official said.

India has social security agreements with 21 countries un- der which the employees continue to make provident fund contributions in their home country through their certificate of coverage or under totalisation agreement.

Experts, however, said the judgement has brought relief to expatriates in the country. “This is a welcome judgment of the Karnataka HC and would assist in reducing burdensome PF compliance for international workers (expats),” Amit Agarwal, partner, Nangia & Co said. According to Agarwal, the cash flow impact of the judgment on expats or foreign companies is very significant, as the EPF was earlier calculated and deposited on the entire salary of foreign workers.

S-ET Image source: Google

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