A US citizen working in India for a covered establishment is generally an international worker under the Employees' Provident Fund rules. The employer and employee contribute on the full salary, with no wage ceiling, unless the person is an excluded employee under a social security agreement. Courts have disagreed on the rule, so treat it as a live compliance risk and take advice.
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Key facts
| Who is an international worker | A foreign national working for a covered establishment in India, and certain Indian workers with foreign links as defined |
|---|---|
| Wage ceiling | None for international workers; Indian employees above the prescribed wage ceiling are generally not mandatorily covered |
| Exclusion | A worker covered by an agreement with another country and holding a certificate of coverage |
| Withdrawal | Rules differ from domestic members; withdrawal is generally tied to retirement or permanent incapacity |
| Courts | Karnataka High Court struck down the provisions in 2024; Delhi High Court upheld them on 4 November 2025 |
| Rulebook | Employees' Provident Funds Scheme, 2026, which took effect on 1 July 2026, per law-firm commentary |
Who counts as an international worker
The EPF rules treat foreign nationals employed in India by a covered establishment as international workers. Unlike Indian employees, who are mandatorily covered only up to a prescribed wage ceiling, international workers contribute on their whole salary. An Indian subsidiary of a US company that is covered by the EPF law therefore has to register its US expats.
How contributions work
- The employer and the employee each contribute a percentage of wages, as the Scheme sets, with no ceiling for international workers.
- The employer adds administration charges.
- The contributions are reported and paid monthly through the EPFO system, like those of Indian employees.
- Excluded employees are outside the requirement: those who remain covered by their home country's social security under an agreement and hold a valid certificate of coverage. Because there is no US-India agreement, a US expat cannot rely on this route.
What the courts have said
| Court | Outcome |
|---|---|
| Karnataka High Court (2024), Stone Hill Education Foundation v. Union of India | Held the international worker provisions unconstitutional for requiring contributions on full salary without a ceiling |
| Delhi High Court (4 November 2025), SpiceJet Limited and LG Electronics India v. Union of India | Upheld the provisions; a wage ceiling is a legislative choice. Non-excluded international workers must contribute and can withdraw only on retirement or total permanent incapacity |
| Supreme Court | We are not aware of a final ruling. Check the current position |
The two High Courts disagree, and the Employees' Provident Funds Scheme, 2026 retains a framework for international workers. Many employers keep complying on full salary to avoid arrears and interest if the provisions are later upheld in their region. This is a risk decision to make with advice.
Withdrawing the balance
International workers generally cannot withdraw the balance when they leave India. The usual triggers are retirement at the prescribed age or permanent total incapacity. A US expat should treat the contribution as a long-term cost unless a specific exclusion or relief applies. Ask us for the current withdrawal rules before the assignment is priced.
Employer checklist
- Confirm that the establishment is covered by the EPF law and registered with the EPFO.
- Identify every foreign national on payroll and classify them as international workers or excluded employees.
- Decide, with advice, how to handle the court position for your location and keep the file note.
- Include the contribution in the assignment cost and in the payroll set-up.
- Report and pay each month and keep records for inspection.
What this means for a US parent
- Budget for the employer contribution on the full salary, not a capped amount.
- Tell the expat in the assignment letter that contributions cannot normally be withdrawn on leaving India.
Mistakes to avoid
- Leaving US expats off provident fund payroll without a written legal basis.
- Assuming the Karnataka ruling applies everywhere in India.
- Not budgeting the employer share.
- Telling the expat they can withdraw on return to the US.
How AU Corporate handles this
We run payroll and provident fund compliance for foreign nationals, classify international workers and advise on the current position.
Related services: HR and payroll
Official sources
Rules on this page can be verified at the primary sources: the Employees' Provident Fund Organisation and the Ministry of Labour and Employment.
Frequently asked questions
Does a US citizen in India have to contribute to provident fund?
Generally yes, as an international worker of a covered establishment, unless an exclusion applies. Because there is no US-India agreement, the agreement-based exclusion is not available.
Is there a wage ceiling for international workers?
No. International workers contribute on their whole salary, although Indian employees are mandatorily covered only up to a prescribed ceiling.
Can an expat withdraw the balance when leaving India?
Generally no. Withdrawal is tied to retirement at the prescribed age or permanent total incapacity, subject to the current rules.
Did a court strike down the rule?
The Karnataka High Court did in 2024. The Delhi High Court upheld the provisions on 4 November 2025. We are not aware of a final Supreme Court ruling.
What is an excluded employee?
A worker who stays covered by their home country's social security under an agreement with India and holds a certificate of coverage.
Does an Employer of Record avoid this?
No. The EOR becomes the covered employer, and the same provident fund rules apply to the worker.
What is the EPF Scheme, 2026?
The current provident fund scheme, which took effect on 1 July 2026 per law-firm commentary, and retains provisions for international workers.
What if we have not been contributing?
Take advice quickly. Arrears, interest and damages can apply, and there are routes to regularize.
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Read the guide →Sources
Last updated 14 October 2026. General information only, not legal or tax advice. Indian rules change often; confirm current requirements before acting.