PF for Foreign Employees in India: It Depends on the Passport

PF for foreign employees in India now runs under the Employees’ Provident Funds Scheme, 2026, in force on publication in the Gazette dated 29 June 2026, and a corrigendum of 4 August 2026 provides that foreign “international workers” contribute on full wages with no ceiling. Whether a secondee costs 24% of wages (12% each way at the standard rates) in a fund that, as a general rule for workers outside a social security agreement, they cannot touch until 58, or nothing in India, turns on their passport, their home system and whether their country has a social security agreement with India. Groups with foreign nationals on Indian payrolls should check each person now: the India–UK agreement has applied since 15 July 2026, and the Supreme Court is reported to have issued notice in a challenge to the regime.

What changed in 2026

• New scheme. The EPF Scheme 2026 was made under s.15(1)(a) of the Code on Social Security, 2020, and supersedes the 1952 Scheme “except as respects things done or omitted to be done before such supersession” (G.S.R. 525(E), preamble). It took effect on publication (para 1(2)). The Code provisions it rests on have been in force since 21 November 2025 (S.O. 5319(E)).
• Corrigendum. G.S.R. 703(E) of 4 August 2026 limits the wage ceiling to a “member other than international workers” (item 8(i), para 18(3)) and the above-ceiling exclusion to an “employee other than the International Worker” (item 1(ii), para 2(1)(f)(i)).
• UK agreement. The India–UK social security contributions agreement entered into force on 15 July 2026, with the trade agreement (PIB, 15 July 2026; UK Treaty Series No. 31 (2026)).
• Wage ceiling. A Gazette notification of 17 September 2026, reported as S.O. 5109(E), raised the ceiling for other employees from INR 15,000 to INR 25,000 a month (PIB, Ministry of Labour and Employment, 23 September 2026). The ceiling does not apply to international workers.

Who is an international worker for PF in India

The Scheme defines an “International Worker” in two limbs (para 2(1)(j)):

1. “an employee other than an Indian employee, holding other than an Indian Passport, working for an establishment in India, to which the Code applies”; and
2. an Indian employee who has worked, or will work, in a country with which India has a social security agreement (SSA) and who is eligible for benefits there because of it.

The test in limb (i) is the passport, not the visa, so an OCI cardholder with a foreign passport is an international worker. Nationals of Nepal and Bhutan are “deemed to be an Indian worker” under the 1950 and 2007 friendship treaties (proviso to para 2(1)(j)), so the ordinary rules and the wage ceiling apply to them. Immigration status is a separate question (see India business and employment visas).

When PF for foreign employees in India applies, and when it does not

The Scheme applies to every establishment covered by Chapter III of the Code (para 1(3)). There, every international worker is “entitled and required” to become a member from the date of joining (para 9(5)(ii)). A person who was, or was required to be, a member under the 1952 Scheme continues as a member (para 9(5)(i), as corrected).

The main exit is “excluded employee” status (para 2(1)(f)(ii)). It covers a worker who, “as a citizen or resident of their country of origin”, contributes to that country’s social security programme, where India has either:

• (A) an SSA with that country on a reciprocity basis, and the worker “enjoys the status of a detached worker for the period and terms specified in such agreement”; or
• (B) a comprehensive economic agreement made before 1 October 2008 with a social security clause that “specifically exempts natural persons of either country from contributing to the social security fund of the host country”.

The Scheme does not use the words “certificate of coverage”. In practice, detached-worker status is proved by a certificate from the home institution; the UK agreement provides for one (Art 15(6)). Limb (B) names no agreement. The India–Singapore CECA, in force since 1 August 2005, contains such a clause (Art 9.3(4)). EPFO letter File No. IWU/7(14)2008/Singapore, 14 March 2017, told field offices that Singapore citizens working in India purely as temporary workers, without permanent-resident status in India, are to be treated as “excluded employees”, and not to insist on EPF and EPS contributions from their salaries. Singapore’s CPF Board says that from 1 January 2016 Singapore citizens working in India no longer have to contribute to EPF. The letter applied the 1952 Scheme. The 2026 Scheme keeps limb (B) but names no agreement, so continued application of the letter should be confirmed with EPFO. We read the letter from a scanned copy, because the EPFO link did not open.

Separately, the appropriate Government may exempt an individual employee by notification on a Form-I application, but only where the establishment’s own benefits are “substantially similar or superior” to the Scheme’s (para 12(1)). A detached or exempted worker whose status ends, for example when the agreed period runs out, becomes a member at once (para 9(5)(iii)).

Contribution on full wages: no ceiling

• Rate and base. The employer pays 12% of wages and the employee pays the same (para 18(2)); 10% applies to notified establishments. After the corrigendum, the para 18(3) cap does not apply to international workers, so both shares run on total wages.
• What counts as wages. Section 2(88) of the Code covers all remuneration, including basic pay and dearness allowance. It excludes listed items such as house rent allowance, conveyance and commission, but if those exceed one-half of total remuneration, the excess is added back.
• Foreign currency and home payroll. Pay in another currency is converted at the SBI telegraphic transfer buying rate on the last working day of the month (Explanation to para 18). The Karnataka High Court recorded EPFO demands on “global salary” (Stone Hill, para 24), so pay delivered through a home payroll needs a clear analysis.
• Deadlines and damages. Both shares are due within 15 days of the end of each month (paras 20(1), 28(3)). Damages run at 0.25% to 1% of arrears a month, capped at the arrears (para 23).
• Arrears fall on the employer. The employee’s share can generally be deducted only from wages for the period concerned (para 22(1)); the employer’s share never (para 21). For contractor-supplied staff, the principal employer remains responsible (para 20(4)).
• Returns. Each employer files a consolidated return of its international workers, showing nationality and wages, within 15 days of the Scheme applying to the establishment, or a “Nil” return (para 24(13)(i), as renumbered by the corrigendum). Monthly uploads of joiners, transfers and leavers follow (para 24(13)(ii)).

Withdrawal: generally locked to age 58 unless an SSA applies

An international worker may withdraw the full balance on retirement after age 58, or on permanent and total incapacity (para 51(1)). Para 51 is the specific rule, but para 10(2)(i) keeps an international worker a member until they “withdraw under paragraph 49”, which allows withdrawal on migration abroad (para 49(1)(iii)). How far that reaches international workers outside an SSA is not settled.

The exception is para 51(4): for “a member covered under a social security agreement”, accumulations “shall be payable on ceasing to be an employee”. Such members are paid to “the payees’ bank account”; everyone else is paid to a “bank account in India” (para 53(11)). Some agreements, including the UK one, deal only with contributions (its title; Letter No. 1, UK TS No. 52 (2025)), so confirm with EPFO how para 51(4) treats a non-detached national of such a country.

What you pay, by nationality

EPFO lists 20 SSA partners (19 countries and Quebec) with no status column. MEA marks all 20 and the UK “Active”, though a second MEA table marks Japan, Portugal and Quebec “not in force” (both pages viewed 29 October 2026; MEA page last updated 15 July 2026). The table shows those three separately, as “status requires confirmation”.

For UAE groups, the passport alone does not unlock an exemption. The worker must contribute to the home programme of an SSA country and be a detached worker under that agreement (para 2(1)(f)(ii)(A)). A British or German national employed in Dubai who does not pay into the UK or German system fails that test and pays on full wages, like a UAE national. The India–UAE tax treaty covers taxes on income (Art 2), not PF (see the India–UAE tax treaty guide). Nationals of other Gulf states are in the same position (table above). Those states’ tax treaties are in India’s Gulf tax treaties: Qatar, Oman and Saudi Arabia.

The UK from 15 July 2026: 60 months, not 36

The 2025 exchange of letters said a detached employee would stay in the home system if the posting “does not exceed 36 months” (UK TS No. 52 (2025)). The agreement in force says 60 months (Art 8(1)); an exchange of notes of 6 July 2026 replaced “36 months” with “60 months” (UK TS No. 31 (2026)).

• UK secondees to India. An employee sent on or after 15 July 2026 by an employer that normally operates in the UK stays under UK law if the work is expected, at the outset, to last no more than 60 months. They pay on total remuneration as if working in the UK (Art 8(1), (6)) and, with the certificate, are an excluded employee. A posting planned from the start to exceed 60 months does not qualify; Indian law applies (Art 7(2)).
• Extensions and exceptions. If a qualifying posting is extended, UK cover ends when the posting ends or at 60 months, whichever is sooner (Art 8(2)). HMRC and EPFO may by common agreement provide exceptions to Arts 7 to 11 for “certain persons or categories of persons” (Arts 1(1), 12); the agreement sets no criteria. A new detachment needs a six-month gap, or a gap as long as the last posting if that was shorter (Art 8(5)).
• Postings that began before 15 July 2026. The agreement has no transitional article, and HMRC says people already working in India on that date “will not be a detached worker under Article 8” (NIM33252, updated 22 July 2026). Later UK guidance says an employee sent to India between 15 July 2025 and 14 July 2026 and paying UK Class 1 contributions immediately before entry into force can obtain an HMRC certificate running from 15 July 2026 for 52 weeks, less time already worked in India; Indian social security law then applies (gov.uk, “UK and India: new social security agreement”, updated 27 October 2026). We found no EPFO statement on these cases or on whether EPFO treats that certificate as detached-worker status.
• Indian staff sent to the UK. Para 9(6) requires an employee working in the UK while subject to the Code who wishes to keep detached status, and the employer, to pay on total wages under s.2(88) of the Code, mirroring Art 8(7).

Worked example (illustrative figures)

An Indian subsidiary pays a foreign national INR 6,00,000 a month: basic pay INR 2,40,000, special allowance INR 1,80,000 and house rent allowance INR 1,80,000. HRA is excluded and, at 30% of pay, is below one-half, so nothing is added back. Wages under s.2(88) are INR 4,20,000. The figures apply the standard rates of 12% for the employer and 12% for the employee (para 18(2)) to wages as so defined; they exclude administrative charges and any allocation to the pension scheme.

Over a 36-month posting, contributions for the US national total INR 36,28,800 (36 × INR 1,00,800), and the employer also pays administrative charges at the notified rate (para 29(1)). The Employees’ Pension Scheme, which may take part of the employer share, is outside this note. If unpaid, arrears and damages fall on the Indian employer, and the employee’s share generally cannot be recovered from later wages (paras 21–23). Recharging such costs within the group affects transfer pricing and tax for Indian capability centres.

What the court split means for compliance now

The Karnataka High Court struck down para 83 of the 1952 Scheme under Article 14 and held orders made under it unenforceable (Stone Hill Education Foundation v Union of India, W.P. 18486/2012, 25 April 2024). The Delhi High Court disagreed: foreign employees, usually in India for two to five years, do not face the economic duress uncapped contributions would cause Indian employees, so the classification is reasonable (SpiceJet Ltd v Union of India, W.P.(C) 2941/2012, 4 November 2025, paras 52–54, 60–61). The Supreme Court is reported (Bar & Bench, LawChakra) to have issued notice on 12 March 2026 in LG Electronics India Ltd v Union of India, a challenge to para 83 brought after the Delhi judgment. LawChakra also reports a direction that, in the meantime, no final orders be passed in the s.7A proceedings against the petitioner. We found no copy of the order on sci.gov.in. The reports are not a basis for stopping PF remittances. The safe course is to comply with the 2026 Scheme and treat reliance on Stone Hill for past periods as litigation risk.

Where staff work through an employer of record, check who is the employer and who is the principal employer (para 20), and review the permanent establishment risk.

Points to review

• Map every foreign passport holder on Indian payrolls, OCI cardholders included: home system, secondment or local hire, start date and expected end date.
• Hold a valid certificate of coverage for each SSA-country secondee for the whole Indian period. For UK postings, check the expected duration against the 60-month limit and the six-month gap rule and, for postings that began before 15 July 2026, the 52-week transitional certificate and the date Indian PF starts.
• Test the wage base under s.2(88), including the one-half add-back and home-payroll pay, and confirm payroll applies no ceiling.
• Check filings: the para 24(13) consolidated return (or Nil return), monthly uploads and 15-day remittances.
• Size past exposure under the 1952 Scheme for periods before 29 June 2026, including pending s.7A or para 26B inquiries, by state.
• Set assignment terms: tell non-SSA nationals their balance is locked until 58, and decide who bears the employee share.

Common questions

Do foreign employees in India have to pay PF?

Yes, if they hold a non-Indian passport and work for an establishment covered by the Code (paras 2(1)(j), 9(5)). The main exit is detached-worker status from an SSA country, shown by a certificate of coverage (para 2(1)(f)(ii)).

Is there a salary cap on PF for international workers?

No. Since the corrigendum of 4 August 2026, the ceiling applies only to members “other than international workers” (para 18(3)). Contributions are 12% each way on total wages.

Can a US or UAE employee withdraw EPF when leaving India?

Generally not. Para 51(1) allows withdrawal only after retiring at 58 or on permanent incapacity, paid to a bank account in India (para 53(11)(iii)). Para 10(2)(i) also refers to para 49, which covers migration abroad, so confirm with EPFO before promising staff an exit payment.

How long does the India–UK Double Contributions Convention exempt UK secondees?

Up to 60 months, if the posting is expected at the outset not to exceed 60 months (Art 8(1), as amended by notes of 6 July 2026, replacing 36 months). Postings that began before 15 July 2026 are outside Art 8; UK guidance offers some a 52-week transitional certificate.

Does the Karnataka High Court ruling mean we can stop paying?

No. Stone Hill struck down para 83 of the 1952 Scheme, but SpiceJet disagreed, the Supreme Court is reportedly examining the question, and the 2026 Scheme has its own rules.

Sources

1. Employees’ Provident Funds Scheme, 2026, G.S.R. 525(E), 29 June 2026 (Gazette No. 473, CG-DL-E-01072026-273957). Ministry of Labour and Employment. egazette.gov.in (search by Gazette ID)
2. Corrigenda to the EPF Scheme, 2026, G.S.R. 703(E), 4 August 2026 (Gazette No. 639, CG-DL-E-04082026-275186). Ministry of Labour and Employment. egazette.gov.in (search by Gazette ID)
3. Code on Social Security, 2020 (Act 36 of 2020), ss.2(88), 2(89), 15(1)(a). Gazette of India Extraordinary, 29 September 2020 (CG-DL-E-29092020-222111). Official URL not retrieved; text read from a copy of the Gazette
4. S.O. 5319(E), 21 November 2025, appointing the commencement date of the Code on Social Security, 2020. Ministry of Labour and Employment. labour.gov.in
5. “EPFO wage ceiling enhanced from ₹15,000 to ₹25,000 per month”. PIB (Ministry of Labour and Employment), 23 September 2026, referring to the Gazette notification of 17 September 2026 (reported elsewhere as S.O. 5109(E); the release gives no S.O. number). pib.gov.in
6. International Workers page (list of countries with SSAs; certificate of coverage). EPFO, viewed 29 October 2026. epfindia.gov.in
7. Operating SSA page (India–Netherlands, in force 1 December 2011, posting up to 60 months). EPFO, viewed 29 October 2026. epfindia.gov.in
8. Social Security Agreements. Ministry of External Affairs, last updated 15 July 2026. mea.gov.in
9. “India–UK CETA and Agreement on Social Security Enter into Force”. PIB (Ministry of Commerce and Industry), 15 July 2026. pib.gov.in
10. Agreement on Social Security relating to Social Security Contributions between the UK and India (signed New Delhi, 10 February 2026; in force 15 July 2026), Arts 1, 7, 8, 12, 15, with exchange of notes of 6 July 2026, UK Treaty Series No. 31 (2026). FCDO. assets.publishing.service.gov.uk
11. Exchange of Letters regarding the Negotiation of a Double Contributions Convention, London and New Delhi, 24 July 2025, UK Treaty Series No. 52 (2025). FCDO. assets.publishing.service.gov.uk
12. UK-India Double Contributions Convention (DCC) explainer. GOV.UK, updated 17 June 2026. gov.uk
13. “UK and India: new social security agreement” (including transitional arrangements). HMRC, GOV.UK, updated 27 October 2026. gov.uk
14. National Insurance Manual NIM33252, “Special Cases: India – Transitional situations”. HMRC, GOV.UK, updated 22 July 2026. gov.uk
15. India–Singapore Comprehensive Economic Cooperation Agreement (signed 29 June 2005; in force 1 August 2005), Arts 9.3(4), 16.8. Department of Commerce. commerce.gov.in (exact URL not retrieved)
16. Stone Hill Education Foundation v Union of India, W.P. No. 18486/2012 (L-PF) and connected petitions, Karnataka High Court, 25 April 2024 (K.S. Hemalekha J). karnatakajudiciary.kar.nic.in (official copy URL not retrieved)
17. SpiceJet Ltd v Union of India, W.P.(C) 2941/2012 with W.P.(C) 6330/2021, Delhi High Court (Division Bench), 4 November 2025. delhihighcourt.nic.in (official copy URL not retrieved; digitally signed copy held)
18. Agreement between India and the UAE for the avoidance of double taxation (signed 29 April 1992), Art 2. Income Tax Department. incometaxindia.gov.in
19. Supreme Court notice in LG Electronics India Ltd v Union of India (challenge to para 83 of the EPF Scheme 1952; direction that no final orders be passed in the s.7A proceedings reported by LawChakra only). Secondary source only: reported by Bar & Bench and LawChakra, 12 March 2026; order not verified on sci.gov.in. barandbench.com ; lawchakra.in
20. EPFO letter File No. IWU/7(14)2008/Singapore, 14 March 2017, “Special Provision in respect of International Workers – Exemption granted under the Comprehensive Economic Cooperation Agreement between the Republic of India and the Republic of Singapore (CECA-2005) to Singapore citizens working in India from contributing to social security schemes in India – Clarification regarding”. EPFO Head Office. Read from a scanned copy; the EPFO link did not open. epfindia.com
21. “I am a Singapore Citizen working in India. Do I need to contribute to the India’s Employees’ Provident Fund (EPF)?”. CPF Board, Singapore, viewed 30 October 2026. cpf.gov.sg

Related insights

• India business visa and employment visa – the immigration side of sending staff to India.
• Permanent establishment risk and employers of record – who carries PF and tax risk when staff work through an EOR.
• GCCs in India: transfer pricing, tax and employment – recharging secondee costs inside the group.
• India–UAE tax treaty: a guide for businesses – the tax treaty that sits alongside the no-SSA position for UAE staff.
• UK–India double tax treaty: a guide for UK companies – tax on UK secondees, alongside the new contributions agreement.
• US–India tax treaty: a guide for US companies – tax for US groups whose staff have no SSA cover.

Disclaimer: This article is general information, not tax or legal advice; rules change, so check the current position and take advice on your facts before acting.