The Ministry of Commerce and Industry has notified an amendment to Rule 43A of the Special Economic Zone (SEZ) Rules 2006 by which a SEZ unit may, as per its requirements, permit specified employees to work from any place outside the SEZ under the 'hybrid work' model. The said permission shall be applicable up to 31 December 2024.

This facility of hybrid work would be available to the following:

  • Employees of IT/ITeS SEZ units;
  • Employees who are temporarily incapacitated;
  • Employees who are traveling; and
  • Employees who are working offsite.

The expression "employees" shall include all persons employed on the rolls of the SEZ unit or under a direct contract or the persons deputed to other organizations where the SEZ unit administers the control over their attendance as the principal employer.

The expression "hybrid working" refers to a flexible work model whereby an employer may permit their employees to work from the office or any location outside the employer's office from time to time.

In this context, the government has prescribed the below procedure:

  • The unit should intimate to the Development Commissioner through an email on or before the date on which the facility for hybrid work is permitted;
  • While the list of employees is not required to be submitted, the same should be maintained and made available to the Development Commissioner as and when called for verification;
  • Where an employee ceases to be part of the project of the unit, he/she will be relieved from the unit and the unit shall surrender the identity card;
  • Duty-free goods, including laptops, desktops and other electronic equipment needed by the employee for hybrid work, shall be allowed to be taken outside the SEZ without payment of duty or IGST on a temporary basis, subject to due accounting thereof in the appropriate records;
  • Such temporary removal of duty-free goods will be commensurate to the validity of the hybrid work facility period, provided any failure to bring back the goods into the SEZ within the specified period will attract applicable duty.

In addition to the above, it may be expedient to note that:

  • The hybrid work facility shall be admissible if the SEZ unit continues to operate from the premises as per their letter of approval;
  • The work to be performed by the employee shall be as per the services approved for the unit, and the work is related to the project of the unit;
  • The unit shall ensure that the export revenue of the resultant products or services is duly accounted for.

[Notification No. G.S.R. 824(E) dated 7 November 2023]

Our Comments

This update gives a sigh of relief to all the IT/ITeS SEZ units as well as employees who are either incapacitated, traveling, or working offsite, as they can continue to operate in a flexible hybrid work model until the end of calendar year 2024. However, it would be worthwhile if the government or the jurisdictional offices of Development Commissioners provide further clarity on the exact scope/ambit of the expression "hybrid working" as sought to be defined in the amended Rule 43A along with the timelines to bring in uniformity in the interpretation of the phrase "from time to time."

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