India to push for totalisation pact with US next week

New Delhi: India will next week push for a totalisation agreement with the US, aimed at doing away with dual social security taxation for its workers, and also raise the issue of Washington’s decision to suspend work visas, at the India-US Commercial Dialogue. The dialogue, to be chaired by commerce and industry minister Piyush Goyal and US Secretary of Commerce Wilbur Ross, comes at a time when New Delhi has told the US in its initial argument that its equalisation levy or the so-called Google Tax is not discriminatory but that India will participate in the investigation.

India has been pushing for almost a decade for a social security pact with the US that would exempt Indian workers on H1B visa from contributing to social security.

“Totalisation is a big tax and it is on the agenda. We will raise it along with the issue of H-1B visas,” said an official. The agreement will help avoid double deductions from the income of workers in each other’s countries.

US President Donald Trump last month signed an order to suspend a slew of visas including the H-1B sought after by

Indian engineers and other temporary immigration visas stating that the move was aimed at protecting American workers rendered unemployed due to the economic uncertainty triggered by the Covid-19 pandemic.

“Under the extraordinary circumstances of the economic contraction resulting from the Covid-19 outbreak, certain non-immigrant visa programs authorizing such employment pose an unusual threat to the employment of American workers,” he wrote.

The dialogue and the India-US CEO Forum are scheduled for July 14.

Equalisation levy
In its initial reply to the US on the probe on digital services tax being levied by India and nine others including the European Union, New Delhi has said that the tax is meant for all countries and not discriminatory against the US.

“We have given our arguments and said that we will participate in the probe,” the official said, adding that there are different issues with the US which are being discussed independently and at multiple levels.

The issue has been discussed with the US Trade Representative this week.

India’s final response to the US on the matter is likely next week.

India levies a 6% equalisation levy or the so-called ‘Google tax’ on foreign online advertising platforms to tax companies such as Google, Facebook and Netflix on their online advertising. This year, it expanded its scope to all overseas ecommerce transactions originating from India, but at a reduced rate of 2%..

The first instalment of the tax was due on July 7.

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