India HR and tax alert Indian employment visa application now requires Provident

October 2014
HR and tax alert
India
Indian employment visa application now requires Provident
Fund registration number
Executive summary
The Indian Immigration authorities have
advised that employment visa application
forms are now required to include the
Provident Fund (“PF”) registration number
of the sponsoring Indian entity.
in certain locations are confirming PF
compliance during the post-arrival
registration with Foreigner’s Regional
Registration Office (FRRO) and again at the
time of extension of the foreign national’s
visa/ residential permit.
This development in the effective exchange
of information between Indian Immigration
and PF authorities aims to improve
compliance of ‘International Workers’ with
PF regulations.
At the time of registration, the FRROs in
Chennai and Bangalore require the employer
to confirm that PF contributions will be
made in respect of the foreign nationals.
Background
The Provident Fund scheme in India is a
method of saving for retirement.
In October 2008 the laws around PF scheme
contributions were changed. PF
contributions were made mandatory for
foreign nationals working in India
(“International Foreign Workers”).
Over the years, there has been an increased
focus by the PF authorities on the
compliance of Indian employers employing
foreign nationals. To facilitate this, steps
are being taken to increase the exchange of
information between Indian immigration and
the PF authorities.
Currently, the Indian Immigration authorities
Furthermore, when applying for an extension
of an employment visa or residential permit,
the FRROs in Bangalore and Chennai require
foreign nationals to submit proof of having
made the contribution to PF.
If for any reason PF contributions are not
being made, a suitable explanation should be
filed with the FRRO at the time of
registration or extension.
Key changes
From mid-September, the PF registration
number of the sponsoring Indian entity is a
requirement of online applications for Indian
employment visas.
This new requirement may not pose any
immediate challenge for many Indian
employers who are already registered with
the PF authorities.
EY | Assurance | Tax | Transactions | Advisory
As per the PF laws, Indian enterprises with less than 20 employees are not
required to contribute to the PF and therefore need not register with the PF office.
Where foreign nationals are sponsored by this type of employer, an explanation can
be given at the time of application for the visa.
There is an exception from contributions for International Workers from countries
with whom India has a Social Security Agreement.
Similarly, in certain circumstances where the Indian entity sponsors the
employment visas for short term visitors or employees of business partners (such
as clients or suppliers) they may not be responsible for contributing to the PF for
these employees. These entities will have to examine whether they are required to
provide their PF registration number in the visa application form or whether they
should provide a suitable explanation for not contributing to PF along with the
application.
Next steps
Due to this increased information sharing, Indian entities sponsoring employment
visas for foreign nationals should review their PF and tax compliance to ensure
they are up to date. This will mitigate risk under the new PF and income tax laws
and would also help streamline the immigration process.
About EY
EY is a global leader in assurance, tax,
transaction and advisory services. The
insights and quality services we deliver help
build trust and confidence in the capital
markets and in economies the world over. We
develop outstanding leaders who team to
deliver on our promises to all of our
stakeholders. In so doing, we play a critical
role in building a better working world for our
people, for our clients and for our
communities.
EY refers to the global organization, and may
refer to one or more, of the member firms of
Ernst & Young Global Limited, each of which
is a separate legal entity. Ernst & Young
Global Limited, a UK company limited by
guarantee, does not provide services to
clients. For more information about our
organization, please visit ey.com.
Ernst & Young LLP is a client-serving member
firm of Ernst & Young Global Limited
operating in the US.
About EY’s Human Capital services
Our global mobility team advises many of the
world’s largest global employers – as well as
those just venturing into their first foreign
country. Our performance and reward
professionals help you design compensation
programs and equity incentives that really
engage your key people. We help you meet
your executive tax compliance obligations,
stay on top of regulatory change, manage
your global talent effectively and improve
your function’s strategic alignment. It’s how
EY makes a difference.
© 2014 EYGM Limited.
All Rights Reserved.
EYG no. DN0770
Sonu Iyer
Tel:
+91 11 4363 3160
Email: sonu.iyer@in.ey.com
ED None
Amarpal S. Chadha
Tel:
+91 80 6727 5258
Email: amarpal.chadha@in.ey.com
Surabhi Marwah
Tel: + 91 11 4363 3167
Email: surabhi.marwah@in.ey.com
Mayur Shah
Tel:
+91 22 6192 1104
Email: mayur.shah@in.ey.com
This material has been prepared for general
informational purposes only and is not
intended to be relied upon as accounting, tax,
or other professional advice. Please refer to
your advisors for specific advice.
Alok Agrawal
Tel:
+91 80 6727 5073
Email: alok.agrawal@in.ey.com
2
www.ey.com
HR and tax alert