How to Claim Work-from-Home Expenses in Your ITR
The shift to remote work has altered the way IT professionals work, with personal resources regularly used to boost professional productivity. As work-from-home (WFH) becomes a more common reality for freelancers, consultants, and even full-time employees, many are unaware that certain WFH expenses can be deducted under Indian tax laws if properly categorized and claimed.
However, eligibility to claim these expenses in your Income Tax Return (ITR) depends mainly on your income head. Salaried employees cannot claim work-from-home expenses as deductions unless reimbursed by the employer and taxed accordingly. In contrast, freelancers, independent IT consultants, and professional services that fall under “Profits and Gains from Business or Profession” can use these costs as business expenditures.
The Income Tax Act allows professionals to deduct expenses that are wholly and exclusively incurred for business purposes. For remote IT professionals, eligible expenses may include:
- Home office setup (desk, chair, monitor, etc.)
- Electricity and internet charges
- Software licenses and cloud subscriptions
- Maintenance of work-related devices
- Co-working space rent (if used occasionally)
For freelancers using ITR-3 or ITR-4 (under Section 44ADA), these expenses can either be claimed item-wise (under actuals) or through the presumptive taxation method, where 50% of gross receipts are considered profits and the rest are deemed expenses. However, the presumptive route doesn’t allow itemized deductions, so the choice of taxation scheme plays a crucial role.
Salaried individuals may still benefit indirectly if their employer reimburses WFH expenses and reflects them appropriately in Form 16. However, claiming these as deductions independently is not permitted under current law unless the employee is also earning professional income separately.
To avoid disputes, keep detailed invoices, bank statements, and usage logs for all expenses you plan to deduct. If the expense-to-income ratio appears to be inconsistent, the Income Tax Department may request justification during the audit.
Maximize Tax Savings with Expert Guidance
At Patron Accounting, we help independent IT professionals and remote consultants structure expenses, choose the best tax regime, and file ITRs in full compliance. If you've been working from home and incurring recurring expenses, our experts can help you maximize your legal deductions for fiscal year 2025-26.
