NIM33257 - Special Cases: India - General rule
Social security agreement between the UK and India: General rule
Article 7(1) - (3) of the India Agreement
Article 7(1) provides that an employed person will be subject to only one country’s social security legislation.
Article 7(2) provides that an employed person in one country will be liable to pay social security contributions on the earnings earned in the country where the work activity is carried out. However, this general rule is subject to the exceptions set out elsewhere within Articles 8 to 12.
Where a person is subject to the legislation of the UK or India under this agreement, in accordance with Article 7(3) they will be treated, for the purposes of applying that legislation, as being resident and ordinarily resident in that country (see NIM33555 for further information).
This means that where a person within scope of the agreement moves from India to the UK, commences employment here and where their liability for contributions is determined only under UK social security legislation, Article 7(3) requires the person to be treated as being resident and ordinarily resident in the UK when determining their liability to pay Class 1 NICs. As the employee is treated as being resident and ordinarily resident in the UK, they will be liable to pay UK NICs from the outset of their employment under regulation 145(1) of the Social Security (Contributions) Regulations 2001 (SSCR 2001). Regulation 145(2) of the SSCR 2001 will not apply (see NIM33675 for further information).
As this agreement does not contain a specific provision for employees employed in both countries, Article 7(2) also applies when an employee is normally working in both the UK and India. When this occurs, the employee may be liable to pay social security contributions in both the UK and India. However, they will only be liable to pay UK NICs on the earnings from their employment in the UK and Indian contributions on their earnings from employment in India.
Example
Satish is employed in the UK and is liable to pay UK NICs. Satish resigns from this job and goes to India for a year and takes up short term employment for an employer based there. Satish remains ordinarily resident in the UK. As Satish is employed in India, his liability for contributions is determined in accordance with Indian social security legislation under Article 7(2), and he is treated for the purposes of Indian legislation as being resident and ordinarily resident in India.
Example
Nagitha has been employed in India and liable to pay social security contributions in India. Nagitha resigns from this job and moves to the UK. Nagitha takes up a short-term employment with a UK based employer. Nagitha remains ordinarily resident in India. As Nagitha is employed in the UK, her liability for contributions is determined in accordance with UK social security legislation under Article 7(2) and she is treated for the purposes of UK legislation as being resident and ordinarily resident in the UK.
Example
Chris is ordinarily resident in the UK. Chris is employed by an employer based in the UK and carries out this employment two months in the UK, then two months in India on a rolling period.
As Chris is normally employed in both the UK and India for the same period, under Article 7(2) of this agreement, his liability to pay contributions on these earnings is determined under the legislation of the country where the work is carried out. This means that Chris will be liable to pay UK NICs on the earnings earned in the UK and contributions to the Indian social security scheme on the earnings earned from work in India.