SEZ: NASSCOM recommendations to MoC on industry requirements relating to work from home (WFH)

Today, about 90% of the workforce employed in the IT-BPM sector is working from home (WFH). Given the available technologies and an impetus from the SARS-CoV-2 pandemic, IT/ITeS companies are now looking at a blended working model with both work from office and work from home as a permanent feature including the ones based in SEZs.

While work from home is allowed for SEZ units, NASSCOM recently made a representation to Ministry of Commerce to explicitly clarify some of the provision related to WFH and also suggested certain recommendations which can help industry plan their operations from a long term basis. Given below is a brief summary of our recommendations to the Government on this front.

  • Explicit clarification that employees of SEZ units can work from home on a permanent basis – While SEZ rules allows companies to provide WFH, there is no explicit clarity in the rules as to whether the WFH can be enabled on a permanent basis.. We have therefore requested Government explicitly clarity that employees of SEZ units can work from home on a permanent basis. Appropriate intimation requirements may be specified to avoid a case-by-case approval process.
  • Allow SEZ units to take-out duty-free assets on permanent basis for the purpose of work from home – Today, companies can take out laptops, computers and projections systems outside of SEZ units for the purpose of use of authorized employees. However, in some cases, such permissions are given for temporary period while in other, fixed time permissions are given which may then be subject to extension or review. In this regard, we have requested government to amend SEZ Rules to allow companies in SEZ to take out IT assets for the purpose enabling work from home on a permanent basis, subject to conditions laid under SEZ Rules
  • Simplify de-bonding process related to inspection of goods – There are units which are considering surrendering their SEZ benefits and are looking to move to a higher tax regime. As part of the de-bonding process, physical inspection of duty-free goods is carried out by the authorities to ascertain tax liability depending upon the remaining life of such equipment. Given the fact that majority of employees are working from home using the duty-free assets, we have requested the government to considering one time waiver from inspection requirement towards easing the administrative burden on bringing back all those assets from the employees locations.
  • Allow reduction in operational area on account of permanent work from home – Given companies are now looking to enable WFH on a permanent basis, we have suggested Govt should consider permitting such units to reduce their operational area in SEZs subject to meeting export obligation.
  • Clarity on eligibility to claim exemption under section 10AA of Income Tax Act, 1961 – Given majority of the SEZ employees are working from home, we have therefore suggested that Govt should explicitly clarify that services delivered by those employees from their home locations will be eligible for 10AA exemption to avoid ambiguity in tax treatment.
  • Removal of requirement of E-way bill for movement of duty-free assets between SEZ units and employees’ home – As per GST law, movement of duty-free assets with value exceeding INR 50,000 would require issuance of e-way bill for each movement, which adds to the administrative and compliance burden for of the companies. We have requested the government to allow movement of duty-free assets on a self-declaration basis without the requirement of generation of e-way bill.
  • Claiming benefit of zero rating in case of purchase of assets and direct dispatch to employee’s place – Given the fact that WFH is the new normal, we have requested government to provide clarity on claiming benefit of zero rating in case of purchase of assets and direct dispatch to employee’s home.

We are now pursing on the above recommendations and shall keep you updated on further developments.

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