Claim audit · FY 2026-27
“Salaried employees can deduct home-office rent and electricity as work-from-home expenses”
The condition that decides it
Home-office expense deductions are available only to self-employed professionals, freelancers, or business owners who earn income under Profits and Gains of Business or Profession (PGBP). Salaried employees have no equivalent deduction — their only income-side relief is the flat standard deduction of ₹75,000 under section 16(ia).
What the department sees
LOW
Data the Income-tax Department already receives automatically — the reel doesn't mention this part.
The real math
A salaried employee earning ₹12,00,000 pays ₹24,000/month rent and ₹3,000/month electricity, of which they estimate 30% is work-related — ₹8,640/month or ₹1,03,680/year. Under the Income Tax Act, there is no provision that allows a salaried person to deduct any portion of home expenses against salary income; their only deduction is the flat ₹75,000 standard deduction u/s 16(ia). Contrast this with a freelance UX designer on the same ₹12L income filing under PGBP: they can deduct 30% of rent (₹86,400), 30% of electricity (₹10,800), internet (₹18,000), and a proportionate depreciation on the home-office furniture — total PGBP deductions of roughly ₹1,30,000, reducing business income before slab. The salaried employee who claims these expenses in ITR-1 or ITR-2 and deducts them from total income has no legal basis for doing so; the claim is simply not supported by any section of the Act and would be disallowed in scrutiny. The correct planning tool for a salaried WFH employee is the HRA exemption (if the employer pays HRA and the employee rents), or restructuring the CTC to include meal coupons or other allowances.
Questions people actually ask
There's a right way to do this
Can I deduct home rent and electricity as business expenses?
Sections: 28, 30, 37(1), 16(ia) · We audit claims, not creators. Reviewed by Harun Raaj & Associates, Chartered Accountants · All audited claims