Can those who work from home get tax exemption on expenses like electricity and internet? Relief is possible under some existing rules in India, but let us know what conditions are necessary for this.
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Tax Deductions For WFH: Since Covid, work from home is no longer just a temporary arrangement, but now it has become a permanent working style for many people. But a big question for those working from home is whether they can get tax exemption on their electricity, internet and other household expenses?
There is currently no separate tax bracket or section for work from home in India. But under some existing provisions, you can save your expenses from tax.
1. Standard Deduction (Section 16 ia)
Every salaried person gets a standard deduction of up to ₹ 50,000, which is applicable in both the old and new tax systems. According to the guide of ACTaxIndia, those working from home can also avail this deduction, and small household expenses like electricity, internet, stationery can come under this scope.
2. Internet and telephone allowance (Rule 3(7)(ix))
If your company gives you reimbursement of internet or mobile bill and that expense is related to office work, then it is completely tax free. According to the report of ClearTax, reimbursement based allowance is tax free, while fixed allowance is considered taxable.
In simple language, if the company returns the money after seeing the bill of your internet or mobile expenses, then it is not taxed. But if the company gives a fixed amount every month without asking for the bill, then it comes under the purview of tax.
3. Business expenses for freelancers or consultants
If you are self-employed such as a freelancer, YouTuber, content creator or consultant, then you can consider a part of your house as an office and show the expenses of electricity, internet, furniture, laptop etc. as business expenses. According to a report by ACTaxIndia, such expenses can be claimed under Profits and Gains from Business or Profession, provided the correct documents are available.
Expenses have to be shown as part of business income, whatever expenses you are showing, there should be a proper bill for it and if you are under the purview of GST, then its number too. You have to keep a clear record of all your expenses and earnings, so that you can show it to the tax department.
Global trend of workspace deduction
In countries like America, UK and Australia, those who work from home can show that part of their house which is used as an office to get tax exemption. In India too, under the Income Tax Act, 2025, there is a consideration in this direction whether a similar rule can be implemented here too so that tax relief can be given on expenses like electricity, internet.
The way to tax exemption for those working from home is not completely closed, but it is not straightforward either. Only correct documentation, information about the company’s policy and clarity of expenses can give you tax relief.
