Latest news with #DoubleContributionsConvention
Mint
11-05-2025
- Business
- Mint
How the India-UK Double Contribution Convention benefits employers and employees
On 6 May, India and the UK took a monumental step in strengthening their economic ties by finalizing a landmark free trade agreement (FTA). It's not just a trade pact; it represents a commitment to fostering deeper economic collaboration between two of the world's largest democracies. Alongside the FTA, both nations have agreed to negotiate a reciprocal social security treaty—the Double Contributions Convention (DCC)—which is expected to significantly impact businesses and employees moving between the two countries. The Double Contributions Convention The DCC is designed to facilitate the movement of employees between India and the UK by addressing the complexities of social security contributions. Under the current system, Indian nationals working in the UK are required to contribute to the UK National Insurance Contributions (NIC) after a 52-week exemption, if applicable. Also Read: What makes Mirae Asset's Swarup Mohanty paranoid about his retirement corpus However, this system has its drawbacks, particularly for those who do not stay in the UK long enough to benefit from the contributions they make. For instance, Indian nationals may not receive any benefits if they work in the UK for less than 10 years. The DCC aims to resolve this issue by allowing employees temporarily working in the other country for up to three years to pay social security contributions in their home country. This provision is crucial as it prevents the fragmentation of social security records, ensuring that employees maintain continuous coverage and benefits. Benefits for Indian nationals in the UK One of the most significant advantages of the DCC for Indian nationals is the exemption from paying UK NIC for a period of three years. This exemption means that Indian employees can continue contributing to the Employees' Provident Fund (EPF) in India, enjoying uninterrupted social security benefits. This arrangement not only eases the financial burden on Indian workers but also allows them to retain their social security benefits in India, which is particularly important for those who plan to return home after their stint in the UK. However, it is essential to note that Indian nationals working in the UK may still be required to pay the UK immigration health surcharge. This surcharge is a separate fee that contributes to the National Health Service (NHS) and is applicable to all foreign workers in the UK. Implications for UK nationals in India The DCC also extends its benefits to UK nationals working in India. Currently, UK nationals qualify as 'international workers' under the EPF Scheme in India, which mandates that employers contribute 24% of the gross salary. Upon reaching the age of 58, individuals can claim a full refund of their contributions, along with interest, upon leaving India. Also Read: Details on rent, home loan, TDS: ITR forms seek more disclosures this year Under the DCC, UK nationals temporarily working in India will be exempt from contributing to the EPF for three years. Instead, they will continue to contribute to the UK NIC, ensuring that they maintain their social security benefits in the UK. This reciprocal arrangement is expected to encourage more UK nationals to consider employment opportunities in India, knowing that their social security contributions will not be adversely affected. Early withdrawal benefits and future considerations A critical aspect of the EPF Scheme is that it allows International Workers from countries with which India has entered into social security agreements to claim full withdrawal of their contributions upon completion of their Indian employment, regardless of their age. However, it remains unclear whether UK nationals who have previously contributed to the EPF will be eligible for early withdrawal benefits under the new DCC. As the DCC is still in the negotiation phase, both countries will need to clarify this point to ensure that UK nationals are fully informed of their rights and benefits. The successful implementation of the DCC will depend on the completion of relevant processes in both India and the UK, and stakeholders will be closely monitoring its progress. A step towards enhanced economic ties The India-UK FTA and the accompanying DCC represent a significant leap forward in the economic relationship between the two nations. By addressing the complexities of social security contributions, the DCC is poised to facilitate smoother employee mobility, fostering greater collaboration between Indian and UK businesses. Also Read: Fund houses suggest these four tweaks to make mutual funds even more sahi As both countries work towards finalizing the DCC, it is essential for employers and employees to stay informed about the benefits and implications of this agreement. The DCC not only promises to enhance the social security landscape for employees moving between India and the UK but also signifies a broader commitment to strengthening economic ties and promoting mutual growth. As these agreements come into force, they will undoubtedly pave the way for new opportunities and collaborations, benefiting businesses and employees alike. Sonu Iyer is partner and national leader, people advisory services-tax, EY India, and Puneet Gupta is tax partner, EY India.
Economic Times
11-05-2025
- Business
- Economic Times
Explainer: India-UK free trade agreement -- all you need to know
India and the UK have concluded negotiations for a free trade agreement, aiming to double bilateral trade to USD 120 billion by 2030. The pact eliminates import duties on 99% of Indian goods entering the UK, while India safeguards sensitive sectors. Tired of too many ads? Remove Ads What are the major benefits for Indian industry? Which sectors will enter the UK market at nil import duty? Tired of too many ads? Remove Ads Has India safeguarded its sensitive sectors in the FTA? What duty concessions has it given to the UK in the pact? Tired of too many ads? Remove Ads What are the major benefits for the Indian services sector? How will India gain from signing the Double Contributions Convention agreement with the UK? Has India opened the government procurement sector for UK firms? When will the FTA be implemented? India and the UK earlier this week announced that they have concluded the negotiations for a free trade agreement to boost economic ties between the two countries. The talks commenced in January 2022. It is aimed at doubling the bilateral trade in goods and services from USD 60 billion at present to USD 120 billion by trade pact will provide enhanced market access for a wide range of Indian goods and services in the UK. Similarly, British firms will also enjoy comparable benefits in the Indian are a few questions and answers (Q&A) explaining the benefits of the FTA The FTA ensures comprehensive market access for goods in all sectors, aligning with India's export interests. India will benefit from import duty elimination on around 99 per cent of tariff lines (or product categories), covering nearly 100 per cent of trade value. It offers huge opportunities to increase bilateral trade between India and the has gained market access in all industrial goods at 'Zero duty' on entry into force. It covers sectors like leather, footwear, textile and clothing, gems and jewellery, base metals, furniture, sports goods, transport/auto components, chemicals, wood/paper, mechanical/electrical machinery, minerals. At present, these sectors attract duty in the range of 4-16 per cent in the Sensitive agri-products like dairy products, apples, cheese, oats, animals and vegetable oils are on the exclusion list, which means no duty benefits are provided by India to the UK on these industrial goods like plastics, diamond, silver, base stations, smartphones, television camera tubes, optical fibres, optical fibre bundles and cables are also under that further safeguard certain areas, India has agreed to cut or remove duties gradually over a longer period. These goods include ceramics, petroleum products, chemicals like carbon, red phosphorus, chlorosulphuric acid, sulphuric acid, boric acid, noble metalutions of platinum, aircraft engines, and engineering of Scotch whisky and gin from the UK will be halved to 75 per cent initially and 40 per cent by the 10th year. At present, it is 150 per whisky constitutes only 2.5 per cent of the total whisky market. The tariff reduction is over a longer period of time (10 years). The incremental increase in imports would not significantly affect the domestic on UK autos will be reduced from over 100 per cent to 10 per cent under quotas on both sides, benefiting companies like Tata-JLR. The duty cut may lead to lower prices for vehicles like Jaguar Land Rover (JLR), Rolls-Royce, Aston Martin, and Bentley in quota to import EVs at a concessional rate of duty is limited only to a few thousand. No out-of-quota duty reduction for EVs. The sensitivity related to EVs has been taken care the out-of-quota duty on ICE (internal combustion engine) vehicles will be reduced gradually over a longer period of time, thereby helping our industries to absorb the incremental increase of imports from the UK has provided an assured regime for temporary entry and stay requirements for various categories of natural persons like business visitors, intra-corporate transferees, contractual service suppliers, independent professionals, investors and partner and dependent children of Intra-Corporate Transferees (with right to work).It has also offered mobility commitments in 36 sub-sectors under Contractual Service Suppliers (which also includes Yoga instructors, classical musicians and Chef de cuisine up to a combined total of 1,800 per year) and 16 sub-sectors in Independent Professionals (which includes computer and related services, research and development services).Britain has also agreed not to impose numerical restrictions or Economic Needs Test requirements for the temporary entry of natural persons to their to the commerce ministry, Indian workers who are temporarily in the UK and their employers are exempted from paying social security contributions in the UK for three agreement will lead to savings of around 20 per cent of salary, and it is expected to benefit more than 60,000 employees from the IT sector alone. The benefits to Indian companies and employees would exceed Rs 4,000 But the market access would be limited to the non-sensitive central level entities only, and access for sub-central (state/local government) level entities is excluded. UK suppliers would be allowed to bid for domestic tenders above the agreed threshold (above Rs 200 crore) as deemed Class-II local suppliers under the public will take about three months for legal scrubbing of the text. After that, the agreement will be signed, followed by approval from the Union Cabinet in India and the UK Parliament (which may take up to a year). It will be implemented on a mutually agreed-upon date.
Time of India
10-05-2025
- Business
- Time of India
Explainer: India-UK free trade agreement -- all you need to know
What are the major benefits for Indian industry? Which sectors will enter the UK market at nil import duty? Live Events Has India safeguarded its sensitive sectors in the FTA? What duty concessions has it given to the UK in the pact? What are the major benefits for the Indian services sector? How will India gain from signing the Double Contributions Convention agreement with the UK? Has India opened the government procurement sector for UK firms? When will the FTA be implemented? (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel India and the UK earlier this week announced that they have concluded the negotiations for a free trade agreement to boost economic ties between the two countries. The talks commenced in January 2022. It is aimed at doubling the bilateral trade in goods and services from USD 60 billion at present to USD 120 billion by trade pact will provide enhanced market access for a wide range of Indian goods and services in the UK. Similarly, British firms will also enjoy comparable benefits in the Indian are a few questions and answers (Q&A) explaining the benefits of the FTA The FTA ensures comprehensive market access for goods in all sectors, aligning with India's export interests. India will benefit from import duty elimination on around 99 per cent of tariff lines (or product categories), covering nearly 100 per cent of trade value. It offers huge opportunities to increase bilateral trade between India and the has gained market access in all industrial goods at 'Zero duty' on entry into force. It covers sectors like leather, footwear, textile and clothing, gems and jewellery, base metals, furniture, sports goods, transport/auto components, chemicals, wood/paper, mechanical/electrical machinery, minerals. At present, these sectors attract duty in the range of 4-16 per cent in the Sensitive agri-products like dairy products, apples, cheese, oats, animals and vegetable oils are on the exclusion list, which means no duty benefits are provided by India to the UK on these industrial goods like plastics, diamond, silver, base stations, smartphones, television camera tubes, optical fibres, optical fibre bundles and cables are also under that further safeguard certain areas, India has agreed to cut or remove duties gradually over a longer period. These goods include ceramics, petroleum products, chemicals like carbon, red phosphorus, chlorosulphuric acid, sulphuric acid, boric acid, noble metalutions of platinum, aircraft engines, and engineering of Scotch whisky and gin from the UK will be halved to 75 per cent initially and 40 per cent by the 10th year. At present, it is 150 per whisky constitutes only 2.5 per cent of the total whisky market. The tariff reduction is over a longer period of time (10 years). The incremental increase in imports would not significantly affect the domestic on UK autos will be reduced from over 100 per cent to 10 per cent under quotas on both sides, benefiting companies like Tata-JLR. The duty cut may lead to lower prices for vehicles like Jaguar Land Rover (JLR), Rolls-Royce, Aston Martin, and Bentley in quota to import EVs at a concessional rate of duty is limited only to a few thousand. No out-of-quota duty reduction for EVs. The sensitivity related to EVs has been taken care the out-of-quota duty on ICE (internal combustion engine) vehicles will be reduced gradually over a longer period of time, thereby helping our industries to absorb the incremental increase of imports from the UK has provided an assured regime for temporary entry and stay requirements for various categories of natural persons like business visitors, intra-corporate transferees, contractual service suppliers, independent professionals, investors and partner and dependent children of Intra-Corporate Transferees (with right to work).It has also offered mobility commitments in 36 sub-sectors under Contractual Service Suppliers (which also includes Yoga instructors, classical musicians and Chef de cuisine up to a combined total of 1,800 per year) and 16 sub-sectors in Independent Professionals (which includes computer and related services, research and development services).Britain has also agreed not to impose numerical restrictions or Economic Needs Test requirements for the temporary entry of natural persons to their to the commerce ministry, Indian workers who are temporarily in the UK and their employers are exempted from paying social security contributions in the UK for three agreement will lead to savings of around 20 per cent of salary, and it is expected to benefit more than 60,000 employees from the IT sector alone. The benefits to Indian companies and employees would exceed Rs 4,000 But the market access would be limited to the non-sensitive central level entities only, and access for sub-central (state/local government) level entities is excluded. UK suppliers would be allowed to bid for domestic tenders above the agreed threshold (above Rs 200 crore) as deemed Class-II local suppliers under the public will take about three months for legal scrubbing of the text. After that, the agreement will be signed, followed by approval from the Union Cabinet in India and the UK Parliament (which may take up to a year). It will be implemented on a mutually agreed-upon date.
Time of India
08-05-2025
- Business
- Time of India
India to benefit from easier UK visa rules
NEW DELHI: Indian tech and management professionals, engineers, and R&D advisors will be among the beneficiaries of an easier visa regime under the trade deal with the UK. This includes 1,800 annual visas for musicians, chefs, and yoga instructors. Easier mobility rules , along with other service sectors aimed at Indian companies setting up shop in the UK, are a critical element of the trade agreement announced on Tuesday. The UK has also offered significant commitments for digitally delivered services for Indian suppliers, such as architects, engineering, telecom and officials cited the Double Contributions Convention as a major gain, helping employees on temporary work visas save around Rs 4,000 crore in social security contributions for three years. "It's a comprehensive package with good commitment on investments, mobility (easier visas) and lowering costs, helping companies make more aggressive bids (for contracts)," said an access for Indian business visitors and professionals was a key demand from the Indian side in return for lowering import duties on products of interest to the UK, led by Scotch and automobiles. Besides, govt has agreed to open procurement for British companies, something that it did for the UAE under the trade and economic access for govt procurement will, however, be limited to non-sensitive central level entities, and there is no commitment to allow companies from the UK to participate in state or local bodies' the environment chapter has commitments from India, govt officials said the agreement factors in the different development status of both sides and their national priorities. In the case of labour, however, there is only a provision for cooperation and an institutional mechanism for discussing issues related to skill development, capacity building, and information sharing with carve-outs for state govts and local bodies. "These chapters do not have a dispute settlement mechanism," explained an UK has, however, not agreed to offer any concessions under the Carbon Border Adjustment Mechanism, with India having the right to retaliate.
Business Recorder
08-05-2025
- Business
- Business Recorder
UK dismisses idea that British workers being sold out in India trade deal
LONDON: British Prime Minister Keir Starmer on Wednesday dismissed the idea that he had sold out British workers by giving a tax break to some Indian workers as part of a free trade agreement with India, calling the claims 'incoherent nonsense'. The trade deal announced on Tuesday, which includes a range of tariff cuts on British imports to India, also exempts some short-term workers from India from paying into Britain's social security system for three years. The exemption under the so-called Double Contributions Convention (DCC) also applies to British workers in India, but while Britain barely made mention of this element of the trade deal, India hailed it as a 'huge win'. British opposition parties accused the government of signing up to a deal that would unfairly benefit India. 'Our India trade deal ... is good for British jobs. The criticism on the double taxation is incoherent nonsense,' Starmer told parliament. 'It's in the agreements that we've already got with 50 other countries.' Britain has social security agreements with the European Union and countries including Switzerland, Canada, Japan and Chile, with some deals allowing for five-year exemptions, which ensure migrant workers are not taxed in two countries at one time. India also has similar agreements with other nations.
