Centre allows 100% WFH for IT units in SEZs till December 31, 2023

The commerce department on Thursday allowed information technology (IT) firms operating in special economic zones (SEZs) to permit 100 per cent work from home (WFH) or any place outside such zones till December 31, 2023. 

According to the amended rule 43A under the SEZ law, employees of IT and information technology enabled services, employees who are travelling as well as those who are working offsite will be allowed to work from home (WFH) or any place outside SEZs.

In July, the Centre had allowed 50 per cent of the employees in SEZs, including contractual workers, to work from home. Till now, WFH was permitted for a maximum per­iod of one year in an SEZ unit. The flexibility was also granted to development commissioners of SEZs to approve a higher number of people to WFH.

However, during implementation of the rules, the industry had pointed out there were various challenges on interpretation as well as compliance related challenges.

The new rule states that a unit will have to only maintain the lists of employees who are allowed to follow WFH or from any place outside SEZs. The list will have to be submitted to the development commissioner whenever required.

Besides, employees will have to be provided with duty-free goods, including laptop, desktop, and other electronic equipment for WFH or any place outside the SEZ, without any payment of IGST or services tax on a temporary basis.

Ashish Aggarwal, VP and head of public policy at NASSCOM, said this is a major step towards ease of doing business. “Given the industry feedback that the earlier notification issued in July 2022 was posing operational challenges, the government has now simplified the SEZ rules to allow IT BPM firms to implement a hybrid model based on their requirement. Now, till December 2023, only an email intimation without the need to submit a list of employees is needed,” he said.

“Industry is today at 85-88 per cent remote working. The one-year relaxation is expected to allow the industry to gradually reach a stable level of hybrid working with a more even split in work being done from offices and remotely,” he said.

Ritika Longaney Gupta, Partner Tax and Regulatory at EY India said the new rule will act as an enabler for SEZ units to hire talent from tier two and tier three cities. “By unlocking this untapped potential, IT / ITeS SEZ units will be able to further contribute to the export revenue and generate additional employment for the nation,” Gupta said.