The government has amended the Special Economic Zones (SEZ) Rules, 2006 to accommodate the work-from-home model of employment, a move expected to change the demand for leasing of space at information technology parks.
This is also expected to help companies attract and retain talent with flexible work-from-home and hybrid work options.
As per the notification issued by the commerce and industry ministry, a unit operating in the SEZ may permit its employees, including contractual staff, to work from home or from any place outside the SEZ.
This proposal for working from home will cover a maximum of 50% of the total employees, including contractual employees, of the unit. The development commissioner may approve a higher number of employees to work from home for any bona fide reason to be recorded in writing.
"The guidelines are welcome as there were different rules issued by each development commissioner. However, in the new world of hybrid working, it remains to be seen whether the 50% threshold will be achievable," said Abhishek Goenka, partner of consultancy firm Aeka Advisors India. “Further, clarity is needed on the manner in which the 50% test is to be applied, i.e., on the stated capacity of the SEZ unit or the total strength of the company.”
Employees who are covered under this notification include employees of the IT and IT-enabled services SEZ units, employees that are temporarily incapacitated, employees who are travelling; and employees who are working offsite.
"It will allow companies to onboard new talent in the office environment while extending the work-from-home policy for existing talent. This is a welcome move for corporations as we are in the midst of a gradual phase of return to work, especially in the IT and ITeS sector," said Karan Singh Sodi, regional managing director, JLL India. “The last two years have seen pressure on their attrition rates as well as growth in the business, thereby creating new jobs in the IT and ITeS sector.”
The units established in SEZ are granted certain incentives, including tax benefits for goods and services exported by them, but with stringent controls in place. These conditions include specific permission to move assets outside the SEZ premises and allowing employees to work from home.
While various SEZs had allowed suo-moto permission for work from home in the backdrop of the Covid-19 pandemic, in March, however, they asked most of them to resume work from the office.
The insertion of Rule 43A in the SEZ Rules provides companies the flexibility to allow a maximum of 50% of their employees to work from home, along with prior permission to temporarily remove goods such as laptops, computers, electronic equipment, etc., from the SEZ unit to a domestic tariff area without payment of duty or integrated goods and services tax (IGST).
As per the new provisions, a company’s unit operating in the SEZ is expected to ensure export revenue of the resultant products or services are accounted for by the unit to which the employee is tagged.
The unit whose employees are working from home or from any place outside the SEZ on the date of commencement of the SEZ (third amendment) Rules, 2022, is expected to submit its proposal for permission within 90 days from the date of such commencement.
The development commissioner, on receipt of such a proposal with compliance, can grant permission to the proposal of the unit, which will be valid for a period of one year from the date of the permission. The authority can grant an extension for this permission, not exceeding one year at a time.
The application for the extension needs to be submitted at least 15 days in advance to the development commissioner, except in the case of employees who are temporarily incapacitated or traveling.
Source Name:-Economic Times