Tax Deductions For WFH: After Covid, work from home is not 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?
Currently, there is 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 is entitled to a standard deduction of up to ₹ 50,000, which is applicable in both the old and new tax systems. According to ACTaxIndia’s guide, those working from home can also avail this deduction, and small household expenses such as electricity, internet, stationery can fall 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 a report by ClearTax, reimbursement based allowance is tax free, while fixed allowance is considered taxable.
In simple words, if the company returns the money after seeing your internet or mobile bill, then it is not taxable. But if the company returns 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 must 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 income so that you can show it to the tax department.
The Global Trend of Workspace Reduction
In countries like the US, the UK and Australia, those who work from home can show the part of their house that is used as an office to get tax exemption. In India too, under the Income Tax Act, 2025, there is a discussion going on whether a similar rule can be implemented here too so that tax relief can be given on expenses like electricity, internet etc.
The road to tax relief for those working from home is not completely closed, but it is not straightforward either. Only proper documentation, knowledge of company policy and clarity of expenses can give you tax relief.
