sez: Government changes SEZ standards to help companies opt for flexible working options

The government amended the Special Economic Zones (SEZ) rules of 2006 to accommodate the work-from-home employment model, a move that is expected to change demand for rental space in IT parks.

It should also help businesses attract and retain talent with flexible work-from-home and hybrid work options.

In accordance with the notification issued by the Ministry of Trade and Industry, a unit operating in the SEZ may allow its employees, including contract staff, to work from home or from any location outside the SEZ.

This proposal to work from home will concern a maximum of 50% of the total workforce, including contract employees, of the unit. The Development Commissioner may authorize a higher number of employees to work from home for any valid 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 work, it remains to be seen whether the 50% threshold will be achievable,” said partner Abhishek Goenka. from the consulting firm Aeka. Advisors India. “Furthermore, clarification is needed on how the 50% test is to be applied, i.e. the declared capacity of the SEZ unit or the total strength of the company.”

Employees covered by this notification include employees of IT Services and IT Services SEZ units, temporarily incapacitated employees, traveling employees; and employees who work off-site.

“This will allow companies to integrate new talent into the office environment while extending the work-from-home policy for existing talent. This is a welcome move for companies as we are in the midst of a phased phase. back to work, especially in the IT and ITeS sector,” said Karan Singh Sodi, Regional Managing Director, JLL India. “The past two years have seen pressure on their attrition rates as well as the growth of the company, thus creating new jobs in the IT and ITS sector.”

Units established in SEZs enjoy certain incentives, including tax benefits for the goods and services they export, but with stringent controls in place. These conditions include specific permission to move assets off SEZ premises and allow employees to work from home.

While various SEZs had allowed suo-moto permission for working from home amid the Covid-19 pandemic, in March, however, they asked most of them to return to work from the office. .

The insertion of Rule 43A into the SEZ rules provides companies with the ability to allow up to 50% of their employees to work from home, as well as prior authorization to temporarily remove assets such as laptops , computers, electronic equipment, etc., from the SEZ Unit to an inland tariff zone without payment of duty or Integrated Goods and Services Tax (IGST).

Under the new provisions, the unit of a company operating in the SEZ must ensure that the export income from the resulting products or services is accounted for by the unit to which the employee is attached.

The unit whose employees are working from home or from any location outside the SEZ on the effective date of the SEZ Rules (Third Amendment), 2022, should submit their proposal for authorization within 90 days from the date of this start.

The guidelines state that work to be performed by employees authorized to work from home under this rule will be identical to services approved for the unit, and the work is tied to a unit project.

The unit operating in the SEZ should submit its work-from-home proposal for its employees to the Development Commissioner via email or physical application. This application must contain the terms and conditions of working from home, including the date from which the corresponding authorization will be used and the details of the employees who will be covered by this authorization.

The Development Commissioner, upon receipt of such conforming proposal, may grant clearance to the Unit Proposal, which shall be valid for a period of one year from the date of clearance. The authority may grant an extension of this authorization, not exceeding one year at a time.

The request for extension must be submitted at least 15 days in advance to the Development Commissioner, except for employees on temporary incapacity or on the move.

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