1) The employee qualifies as an IW because they are either a foreign national working in India, or an Indian passport holder who has worked outside India and is now employed by an Indian entity.

2)PF is mandatory on the total monthly salary (basic + DA + retaining allowance) without a salary cap. Both employer and employee contributions (12% each) will apply.

3)An International Assignment/Agreement is generally preferred over a new, local, one-year job offer. This approach helps maintain continuity, handles tax equalization, ensures compliance with Indian labor laws, and clearly outlines the temporary nature of the assignment for repatriation purposes.

If an employee (whether an Indian passport holder or foreign national) physically works in India and renders services for an Indian establishment, even for a limited duration such as one year, Indian employment laws are triggered. Duration alone does not exempt compliance.
On the Provident Fund aspect specifically, under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the EPF Scheme, such an employee is likely to be treated as an International Worker once he resumes employment in India after having worked abroad. This classification applies irrespective of whether the assignment is for one year or longer.
Since there is no Social Security Agreement between India and the United States, the following consequences generally apply: • PF coverage becomes mandatory once the employee is on Indian payroll or deemed to be employed by an Indian establishment
• The ₹15,000 wage ceiling does not apply
• PF contribution is calculated on the full eligible salary (basic + DA, as defined under PF law)
• Exemption from PF is not ordinarily available merely because the assignment is temporary
From a compliance-risk perspective, structuring the engagement as a “standard Indian job offer” versus an “international transfer” does not materially change PF exposure if: • The employee works from India, and
• The Indian entity exercises control/supervision, or
• Salary costs are borne or cross-charged to India
Authorities will examine who the real employer is, where the services are rendered, and where economic control lies. If employment is effectively in India, PF liability is likely to arise regardless of nomenclature.
Secondment or short-term assignment structures can sometimes be used to manage cost impact, but they carry audit and litigation risk if the arrangement is perceived as artificial. In recent years, PF authorities have increasingly challenged such structures, especially in multinational audits.
A more defensible approach typically involves: • Accepting International Worker status upfront
• Registering the employee under Indian PF
• Ensuring contributions are made correctly on full eligible wages
• Aligning payroll, tax, and employment documentation consistently
While this may increase short-term statutory cost, it significantly reduces long-term exposure to PF demands, interest, penalties, and prosecution.
If cost mitigation is critical, alternative remuneration structuring (within the boundaries of law) can be explored, but this must be done carefully and with documentation that can withstand scrutiny.
In summary: • A one-year India assignment does not avoid PF applicability
• International Worker classification is likely
• No SSA relief is available for US returnees
• Substance of employment will override form
• Conservative compliance is the most defensible strategy
If you intend to proceed, the next step would be a detailed review of: • The proposed employment/assignment agreement
• Payroll structure
• Cost recharge arrangements between US and India entities
• Tax residency and withholding implications

For this one-year transfer of a former H1B visa holder to Mumbai, the most compliant and defensible approach is to process it as a formal international assignment, not a local hire, with the individual classified as an International Worker under India's Provident Fund (PF) rules. Since the employee will be working from India and there is no Social Security Agreement between the US and India, PF contributions become mandatory on the employee's full eligible salary without the Rs. 15,000 wage ceiling. Attempting to use alternative structures like secondment primarily to avoid PF could lead to significant compliance and audit risks, as Indian authorities would likely deem the employment relationship and obligation to be in India. Therefore, the assignment should be structured with a clear assignment letter, ensuring payroll is run through the Indian entity, with appropriate PF deductions and tax withholdings from day one. This approach, while incurring the PF cost, provides certainty and minimizes the risk of penalties for non-compliance with Indian statutory requirements.

For a US H1B employee transferring to Mumbai for one year (March 2, 2026–March 2, 2027), Indian Provident Fund (PF) contributions under the EPF Act are mandatory from day one if employed by an Indian establishment with 20+ employees, as this US national qualifies as an international worker with no minimum stay threshold or salary cap exemption.There is no comprehensive US-India Social Security Agreement (SSA) currently in effect to provide blanket exemption via Certificate of Coverage (CoC), though India is pushing for one; without it, PF at 12% of full salary (employer + employee shares) applies unless the firm has under 20 employees.Process as an international transfer (secondment) to maintain employment continuity, avoiding Industrial Disputes Act notice/compensation under Section 25FF—far better than a “standard job offer,” which implies termination and new hire, triggering fresh PF enrollment and potential visa/relocation disruptions.