Key Facts about Totalization Pact

Totalization pact is a social security agreement which the US government has signed with various other foreign governments to avoid double taxation of income with respect to social security measures. These agreements are taken into account when determining whether any foreigner is subject to the U.S. Social Security/Medicare tax, or whether any U.S. citizen or resident foreigner is subject to the social security taxes of a foreign country.

India has been trying since 2007 to sign such agreement with US.
Currently temporary migrant Indian workers in US have to make dual payment of social security contributions by, both at home and in the country where they are deployed. Indian workers are losing about $3 billion annually by way of social security contributions that can never be recovered if the US refuses to budge. But US cites technical reason for not signing totalization pact. India has around 3 lakh workers in the US, contributing over $1 billion towards social security taxes; they do not get any benefits. To
avail social security benefits in US one has to stay for over 10 years, but work visas in US are provided for maximum of 6 years. Once it is signed it would benefit workers of both the countries.

India has successfully convinced over a dozen countries, including Belgium, France, Switzerland, Canada, Japan and Sweden, for totalization pacts. So argument of technical reasons given by US may not be valid as other western countries are signing it with India. It is to be discussed when US President Barack Obama visit India as chief guest on Republic Day.