Special Economic Zones- What are they and why should you be looking to expand into one?

With India’s quickly advancing IT industry, the local government has taken a plethora of measures to ensure that it continues to grow at a stable rate. One such technique that has been incorporated across the country is the marking of various regions as special economic zones (SEZs). These are specially marked areas which have a different, more relaxed set of business laws as compared to the rest of the country. As such, they are designed to attract businesses to set up within the area and promote employment opportunities.

That being said, in recent times since the COVID-19 pandemic, the legalities around SEZs have become slightly confusing due to many people working from home. Specifically, as laws are changing according to the public situation, it can be difficult for companies to work around them. One such issue has been with the work-from-home rules regarding SEZs. 

As employees were all sent home during the onset of the pandemic and a robust WFH infrastructure was developed, things have now changed. Although, with many companies still functioning as WFH firms, clarity as to the rules for registration and allowance were a bit hazy. Thankfully, a recent clarification has sorted things out.

What Are SEZ Incentives?

To attract developers into opening units within SEZs, a large number of lucrative benefits are provided. Some of the most prominent are as follows:

  • Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
  • Exemption from Central Sales Tax, Exemption from Service Tax and Exemption from State sales tax. These have now subsumed into GST and supplies to SEZs are zero rated under IGST Act, 2017
  • Other levies as imposed by the respective State Governments
  • Single window clearance for Central and State level approvals.

These, among many other benefits, help promote business units to develop within the SEZ and as such, house many large companies. Thus, with large employee populations split between remote working, in-office roles, and even hybrid positions, things got a bit confusing when the WFH allowance was changed. So, let’s look into the recent change.

Recent WFH Relaxation

Up until now, the work-from-home rules set by the government for SEZs had become quite stringent and tight. This is because only 50% of employees were allowed to work from home and this also included contractual workers. This made employment conditions much more tedious for IT units in SEZs as they also had a one-year limit for permitting work from home.

Thankfully for IT companies, the new rule released by the government states that IT firms in SEZs are allowed to follow 100% WFH until the end of 2023. Specifically, unlike previous rules wherein all employees not in office would have to be sent in a list to the government, the new rules have eased these regulations as well. Now, SEZ IT units will only have to specify the employees working from outside of the SEZ.

However, along with the added leniency, the government has also amended the rules further in an attempt to promote WFH. These rules state that the IT unit shall provide equipment to the employee who is working from outside the SEZ. This includes but is not limited to a laptop, desktop, electronic equipment, etc. So, with these new guidelines, there is a hope to set up a permanent hybrid working structure that can work well for all parties involved.


With such advantages present within SEZs, these new rule changes have provided them and their employees with much-needed clarity. Specifically, larger firms that have been forced to maintain robust working procedures, lists, and more are now allowed to provide a freer working environment. This is also a great step towards finding a balanced mix between remote and in-office working. If you want to learn more about these rules and set up a unit within the SEZ area advantages, we at Seamless can help. Just contact us and our experienced team will guide you through the dos and don’ts to make the most of SEZ benefits.