Hybrid working is the new trend in the industry and recognizing its need, the commerce & industry ministry has established a new rule that is 43A, which allows work from home (WFH), in the Special Economic Zone rule book. According to this rule, 50 percent of total employees can be in WFH mode. Permissions can be granted for higher numbers.
This latest rule will enable the IT companies and ITes ( IT enabled services) to hold on to their employees who are seeking flexibility. Many big to medium-sized companies including renowned ones like TCS or Infosys have work units in SEZs.
Many employees preferred a hybrid work policy but because of the lack of Regulatory clarity, many companies were seeking to bring back the employees to the workplace. To date, several different authorities were issuing different regulations and guidelines regarding work policy, and that too on a short-term basis. However, the notification of the ministry will ensure a consistent WFH policy in SEZ units across the country.
The new rule plans to give benefits to the categories of employees including contractual employees who will be permitted to work from home. These include the employees of IT and ITes, who are traveling, working off-site, or suffering from some health issues.
EY-India tax partner, Pramod Achuthan said that the 50 percent work from home limit of total employees with optional powers to higher limits is the regulator’s way to maintain a balance between the IT sector demand seeking flexibility and the demand for real estate sector to bring back the employees to the workplace.
Initially, WFH will be granted for one year and may be extended periodically for one year at a time. SEZ units are required to maintain proper attendance records and provide them regularly to the regulator. However, the new rule doesn’t seem to cover a situation in which all the employees may be required to work from home like the covid 19 situation, the proposed SEZ should consider this, said an IT consultant.
Further, Achuthan added that In the backdrop of WFH, the sector also welcomes clarification on the availability of income tax holidays (under section 10AA) to avoid unnecessary legal actions.