Obama signs new law raising H-1B visa fee: Setback for Indian IT companies

The H-1B visa issue continues to haunt the Indian tech companies, with US President Barack Obama on December 18 signing into law a USD 1.8 trillion spending package which, among other things, introduces a hefty USD 4,000 fee for certain categories of H-1B visa and USD 4,500 for L1 visa.

This latest development comes as a setback for the Indian IT companies as they would have to pay millions of dollars while applying for H-1B visas, as they heavily rely on this work visa for highly skilled IT workers to get their work done in the U.S. Terming it as highly discriminatory, the Indian IT companies said the text of the legislation has been written in such a way that such a high fee would have to be paid by only major Indian IT companies.

The ‘Consolidated Appropriations Act 2016’ signed into law by Mr Obama, includes a USD 1.1 trillion omnibus spending bill that funds the government until September 30, 2016, as well as a USD 680 billion tax package. As per the legislation, companies having more than 50 employees and having more than 50 per cent of their US employees on H-1B and L1 visas would have to pay the new fee when the next visa application session kicks off on April 1, 2016.

In 2016, the US Congress approved a quota of 65,000 H-1B visas, which was filled up in the first few days of the start of the application process on April 1. The U.S. government had to resort to a computerized draw of lots as it received several times the quota of 65,000.

Indian techies, who go to the US on H-1B and L1 visas, also pay Social Security and Medicare as part of their pay role. This costs more than USD 1 billion per annum.

According to US rules, the H-1B visa holders are eligible to receive Social Security benefits even if they leave the US, provided they have paid Social Security payroll taxes for at least 10 years. However, since Indian IT professionals on H-1B visas can’t stay in the US for more than six years, they do not receive the benefits.

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