- Work from home in services needs mutual agreement between employer and employee.
- After maternity benefit ends, a mother may work from home if the work allows it, on mutually agreed terms.
- The 48-hour weekly limit still applies at home.
- A flat WFH allowance is taxed as salary.
On this page
What should a WFH policy in India include?
Eight clauses cover nearly every dispute you will meet.
| Clause | What to write |
|---|---|
| Eligibility | Roles, probation status and how to apply |
| Hours and availability | Core hours, break rules and the 48-hour weekly cap |
| Location | Home address on file, and rules on working from another city |
| Equipment | Company laptop, accessories and who repairs them |
| Allowance or reimbursement | Monthly amount or bill-based claims |
| Data security | VPN, screen locks, no personal devices for client data |
| Office visits | How much notice before an in-person day |
| Withdrawal | How either side can end WFH, in writing |
The location clause matters more than it looks. An employee who moves to another state shifts your Professional Tax and Shops and Establishments obligations with them.
For staff who split their week, align this policy with your hybrid work terms. Home and office rules should never contradict each other.
Is a WFH allowance taxable in India?
Yes, a flat monthly WFH allowance is taxed as salary.
The salary exemptions table in section 19 of the Income-tax Act, 2025 lists no exemption for a work from home or internet allowance. So it is added to taxable salary and TDS applies.
Let’s say you pay ₹2,000 a month.
| Item | Amount |
|---|---|
| Annual allowance | ₹24,000 |
| Tax for an employee in the 30% slab, with 4% cess | ₹7,488 |
| What the employee keeps | ₹16,512 |
That is why many employers supply equipment directly through IT equipment provisioning rather than paying cash for it.
What data rules apply to employees working from home?
The same as in the office. Your security duty follows the data.
Section 8(5) of the DPDP Act, 2023 requires reasonable security safeguards against a personal data breach, and the DPDP Rules apply that duty from 13 May 2027. Home Wi-Fi and shared family laptops are the weak points. Insist on a company device.
Maternity is a separate route. Section 60(5) of the Code on Social Security on Court Book lets a mother work from home after her benefit period where the work allows it.
How does Remunance run WFH arrangements for your India team?
Remunance writes your WFH terms into each employment contract it issues, supplies and recovers laptops, and pays any allowance through payroll with correct TDS. We have hired more than 1,200 people for clients across 34 Indian cities. Our guide to working remotely in India covers the practical side. Get a WFH policy drafted for your India staff.
What else do people ask about WFH policy in India?
Is work from home a legal right in India?
No. It is a term agreed between employer and employee, which the Model Standing Orders, 2026 for services recognise.
Can an employer cut salary for work from home?
Not without the employee’s written agreement. Pay is a contract term, and a cut must never take wages below the minimum wage.
Does a WFH employee in another state need a different policy?
The policy can stay the same. But the state’s Shops and Establishments Act and Professional Tax may change, so register and deduct accordingly for your remote team.
Planning a hire in India?
Our founding team has run payroll and hiring in India for 22+ years, first as Remunance Systems, which was later acquired by ADP.