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Work From Home in Special Economic Zones

  1. Overview:
    The Department of Commerce has notified a new Rule 43A – Work from Home to the in Special Economic Zones Rules, 2006.[i] The notification was issued on demand from the industry for making a provision for a country wide uniform Work From Home (“WFH”) policy across all Special Economic Zones.[ii]


  1. Application of the New Rule:
    Rule 43A (2) provides WFH for following category of employees of a unit in Special Economic Zone (“SEZ”):a) Employees of IT/ITeS SEZ Units[iii] (“Unit(s)”),b) Employees, who are temporarily incapacitated,c) Employees, who are travelling, or

    d) Employees, who are working offsite.


  1. Procedure and Proposal by the Unit:
    a) As per subsection (3), a Unit should submit its proposal for WFH to the Development Commissioner (“DC”) through email or physical application. No format for the proposal has been provided, but the proposal should contain the terms and conditions of WFH, including the date from which the permission for WFH shall be utilized and the details of the employees to be covered by such permission for WFH.b) If the DC is satisfied that the proposal complies with this rule, the DC may grant the permission to the proposal of the Unit which shall be valid for a period of one year from the date of such permission. The DC, under subsection (5) has the ability to extend the permission for such period, not exceeding one year at a time.[iv]c) Every proposal for permission of WFH or an application for extension must be submitted, at least 15 days in advance, to the DC, except in case of employees who are temporarily incapacitated or travelling.[v]
  2. Limits:a) Under subsection (7) and (8), WFH may be extended to maximum 50% of total employees including contractual employees of the unit. However, the DC of SEZs may approve a higher number of employees for any bona-fide reason to be recorded in writing. The Unit must maintain accurate attendance record for the entire period of permission for WFH and shall submit to the DC, from time to time.[vi]b) WFH is allowed for a maximum period of 1 year. However, same may further be extended for additional 1 year periods by the DC.


  1. Transition Period:
    For Units whose employees are already working from home, the notification provides a transition period of 90 days. Accordingly, a Unit, with WFH employees on the date of commencement of the SEZ (Third Amendment) Rules, 2022 must submit its proposal for permission to the DC within 90 days from the date of commencement of such Rules.


  1. Unit Responsibilities:
    a) The work performed by the WFH employee must be as per the services approved for the Unit, and must be related to a project of the Unit.b) The Unit must ensure export revenue of the resultant products/services to which the employee is tagged to be accounted for.c) The Unit may provide to an employee such goods, including laptop, computer, video projection system, other electronic equipment and secured connectivity (for virtual private network, virtual desktop infrastructure) to establish a connection between the employee and work related to the project of the unit with the prior permission of the Specified Officer[vii] to temporarily remove such goods to the Domestic Tariff Area[viii] without payment of duty or integrated goods and services tax, subject to the following procedure, namely:-
    • Unit shall account for the goods removed temporarily;
    • Unit shall issue a certificate authorizing the employee by name and giving the full specification, namely, serial number and model number and make of the equipment intended to be taken outside the processing area temporarily and a copy of the certificate shall be endorsed to the Specified Officer and acknowledgement received by the Unit;[ix] and
    • Unit shall maintain a record of such certificate of authorization issued for temporary removal of equipment.[x]


  1. Effects:
    The WFH rules in India come shortly after the Netherlands passed a law to establish home working as a legal right and becoming one of the first countries to enshrine such flexibility in law.[xi] The new Rule 43-A provides recognition to new ways of working in the IT/ITeS sector post-COVID.[xii] However, a potential issue that may arise is the requirement to submit details of employees working from home as it may be hard to predict which employee will be required in the office for a particular project at what specific time.[xiii]


If you have any questions about this article, please contact Vivek Balakrishnan, Principal Associate, Inventus Law, India at vivek@inventuslaw.in, or Manya Oberoi, Associate, Inventus Law, India at manya@inventuslaw.in.

Disclaimer: This Memo is being provided for information purposes only and is drafted entirely on the basis of public resources. Information contained on or made available herein is not intended to and does not constitute legal advice, recommendations, mediation, or counseling under any circumstance. This information and your use thereof do not create an attorney-client relationship. You should not act or rely on any information provided herein without seeking the advice of a competent advocate licensed to practice in your jurisdiction for your particular business.

[i] http://sezindia.nic.in/upload/uploadfiles/files/(Third%20Amendment)%20Rules%2C%202022.pdf

[ii] https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1842710

[iii] An SEZ Unit means “A unit set up by an entrepreneur in a SEZ. It includes an existing unit, an Offshore Banking unit and a unit in an International Financial Services Centre.See, SEZ FAQ No. 7 available at https://www.nsez.gov.in/Resources/SEZ%20FAQs.pdf

[iv] https://timesofindia.indiatimes.com/business/india-business/work-from-home-allowed-for-maximum-one-year-in-special-economic-zone-commerce-ministry/articleshow/92995256.cms; https://www.moneycontrol.com/news/business/govt-notifies-work-from-home-rules-for-sezs-what-do-they-mean-for-it-companies-employees-8855411.html

[v] https://www.scconline.com/blog/post/2022/07/15/provision-for-work-from-home-for-the-unit-introduced-vide-sez-third-amendment-rules-2022/

[vi] https://indianexpress.com/article/business/work-from-home-allowed-for-maximum-one-year-in-special-economic-zone-commerce-ministry-8040366/

[vii] Under the SEZ Rules 2006, Section 2 (zd) defines “Specified Officer” as a “Joint or Deputy or Assistant Commissioner of Customs for the time being posted in the Special Economic Zone.See, http://sezindia.nic.in/upload/uploadfiles/files/14_SEZ_Rules_July_2010.pdf

[viii] Under FAQ 2, Domestic Tariff Area means “the whole of India (including the territorial waters and continental shelf) but does not include the areas of the Special Economic Zones.See, https://www.nsez.gov.in/Resources/SEZ%20FAQs.pdf

[ix] https://taxguru.in/corporate-law/special-economic-zones-third-amendment-rules-2022.html

[x] https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1842710

[xi] https://www.firstpost.com/business/explained-centres-new-work-from-home-rules-and-how-it-allows-for-more-flexibility-10932541.html

[xii] https://www.firstpost.com/business/explained-centres-new-work-from-home-rules-and-how-it-allows-for-more-flexibility-10932541.html#:~:text=Rule%2043A%20that%20enables%20work,employees%20who%20are%20working%20offsite.

[xiii] https://www.moneycontrol.com/news/business/govt-notifies-work-from-home-rules-for-sezs-what-do-they-mean-for-it-companies-employees-8855411.html

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