Can Government Employees Have Their Own Business?

Table of Contents

1. Can Government Employees Have Their Own Business?

2. Reasons for not allowing Government employees to do any other private business in India.

3. What Work Is Prohibited For A Government Employee Under The Service Rules?

4. Is There A Legal Way By Which A Government Employee Can Do Their Own Private Business?

5. Key Takeaways

1. Can Government Employees Have Their Own Business?

Running a business is a profitable endeavour. When you do business, you are not under pressure from your bosses, you are not subjected to cruel work hours, and your earning potential is unlimited. So, it is natural for people to start their own business. Government employees also want to start and run their private businesses, but are they legally allowed to run a private business while they are serving a state or a country?

The answer is no. Government employees cannot do other private businesses in India. The laws have been drafted, keeping in mind the best interests of the country. As such, lawmakers have decided that Government employees cannot do other private business. This practise is followed by many other countries.

2. Reasons for not allowing Government employees to do any other private business in India.

1- Code Of Conduct

A Government employee's job is to maintain absolute integrity at all times. He is to be devoted to his job. Furthermore, he must be independent and impartial when discharging his public duties. He should have a decent standard of conduct in his private life as well. To render a courteous service to the public, he is prohibited from engaging in any trade or business. Any private business might interfere with his service to the nation. The private business might result in him breaking the code of conduct.

2- Efficiency

Government employees serve their state or country. It is in the best interest of the country that they concentrate on their jobs fully and work efficiently. Otherwise, people might suffer. If Government employees are engaged in their own business, they might neglect their service towards the state or the country.

3- Conflict Of Interest

Government employees execute what the lawmakers in the country decide. Some Government employees (like senior bureaucrats) also help frame laws for the country. Therefore, there might be a conflict of interest concerning their service towards the country and their own business. For example, suppose a Government employee is running a contracting business. He is asked to frame a law that imposes stringent checks on private contractors that the government hires. This Government employee might hesitate in framing such a law and might even frame the laws in such a manner that benefits private contractors as he is one.

4- Corruption

A Government employee might be tempted to do illegal activities that could benefit his own private business. Even if most Government employees do not act on such temptations, the lawmakers want to avoid any such temptations in the first place as some Government employees might succumb to them.

5- Serving The Nation

Serving one’s state or country is considered a virtue in every country in the world. Government employees serve the people and help the governments run the country, acting as a bridge between them and the people. They are representatives of the country and as such, it would denigrate the post if they run their own private business. They must promptly and courteously serve the country.

3. What Work Is Prohibited For A Government Employee Under The Service Rules?

The service rules lay out what work a Government employee is prohibited. Without a sanction from the Government, the Government employee is prohibited from:

1. Engaging in any trade directly or indirectly;
2. Negotiating for any other employment or undertaking one;
3. Holding a public office or even promotion for a candidate running for any elective post.
4. Promoting any kind of private agency including an insurance agency, commission agency, etc. that is owned or operated by their family members;
5. Helping in registering, promoting, or managing any bank or company required to be registered under the Companies Act, 2013. However, he may do so if he is discharging his public duties by doing so. This situation may arise if he is to help register, promote, or manage a Govt. bank or company. This is your answer for can a government employee own a business in India?
6. Participating or associating himself with -
   - Sponsored media
   - Any media company
   - Any privately produced radio or television program or any other kind of media program.

However, if you're wondering can govt employee do business in the future after retirement or during service time he may participate or associate himself with any programs run by Doordarshan provided he is doing so in an official capacity.

7.     Involving or engaging himself in the registration, promotion, or management of any activities of any non-Governmental organisation if it is aided by the Central Government or State Government or any international agency.

4. Is There A Legal Way By Which A Government Employee Can Do Their Own Private Business?

He may undertake honorary roles for the benefit of society such as running a charity. He may occasionally undertake work that is of an artistic, literary, or scientific character. You can provide guitar lessons. You can sell your paintings or novels. You can undertake private research work. He can take part in amateur sporting activities. So, you can play for your local private sporting clubs for money or otherwise.

He can help promote, register, or manage an artistic, literary, or scientific society or club that aims to promote sports, culture, or recreational activities. He may help promote, register, or manage a co-operative society that works for the benefit of its members or for government servants. He should report to the government the fact that his family member is engaged in a trade or a business or that they are insurance or commission agents. He cannot accept any payment as fees or otherwise for work done by a public body. He also cannot accept any payment for work for any private reasons.

A Government employee must undertake the above-mentioned limitation seriously. He might get fired from his job if he breaks the rules set up by the lawmakers. These rules are there for the benefit of the nation and a Government employee breaking the said rules can do harm to society by his actions. However, if you find any private work that is within the boundaries of the said rules, you may do so without needing any previous sanction from the Government.

5. Key Takeaways

Hopefully this blog has successfully answered your queries and reasoning for can a government employee do business, can government employees have their own business, and or is there a legal way by which a government employee can do their own private business?

But even if you have doubts on can govt employee do business, there are some government employees bypass the laws made for the betterment of society. They run a trade or a business in their family members' name. This practice is fairly common since the government cannot monitor who runs a private business due to the scale of things.

However, before even thinking about things like can a government employee own a business in India? The government employees are officially advised not to bypass the laws since it is illegal and they might get fired from their jobs. Engaging in any trade or business is not only illegal but it is also an ethical violation of their public duty. They must be devoted to discharging their public duties courteously.

Also read:

What Happens to Indian's Tax Money after Payment?
How Many Types of Taxes are There in India?
Income Tax Rules for Non-Residential Indians (NRIs)
Why Do We Pay Income Tax in India? Importance, Applicability & more

FAQs

Q. Can a government employee have a side business?

Ans- Federal employees are certainly allowed to operate a side business as long as their official duties aren't compromised in any manner. You can be a silent partner in a business, but cannot be involved upfront in any official decisions or legal documentations.

Q. Can a government employee be a director of another company?

Ans- Only if you're granted official consent by the government to own or be a director of a company are you allowed to be an active participant of the same. Otherwise, you're not allowed to pursue any other form of employment.

Q. Can a govt employee do legal practice?

Ans- No. According to the Indian Advocates Act 1961, No employee of the private sector or the government can pursue any legal practice or become an Advocate with a legal license to practice law in courts. As the law is a dutiful full-time profession, it's not to be taken as a part-time job or temporary hobby.

Q. Can a retired government employee do business?

Ans- YES, absolutely. You're legally allowed to start your own business after retiring from your government duties even whilst drawing your pensions. Once you're relieved of your services, you're free to pursue your choice of business.

Q. Can government employees have their own business?

Ans- The answer is NO. Government employees are entitled to their position and duty full-time or till their retirement. They cannot legally own a private or side business especially when they're still providing their services to the government.

Q. Can a govt employee do business?

Ans- Government employees who are actively providing their services to the country aren't officially eligible to own or be a part of any private or side business. Once you retire, you can start your own business in India, or join a partnership as per your desires.

Q. Can a government employee become a trustee?

Ans- Yes, a government officer or government employee can be an official member, founder, director, trustee of a Non-Governmental Organisation (NGO) and Non-Profit Organisation.

Q. Can I do business with government job?

Ans- No. As long as you're serving for the government you cannot establish or own a private business. Although, if you want to start a business for some extra income you can invest & begin a business in the name of any other family member or relative.

Q. Can a government employee own a business in India?

Ans- No, owning a side business while you're still working for the government could cause some serious damage to the work pattern. The government doesn't want their employees' attention to be diverted and have any pitfalls on their official duties.

Q. What law prevents Government employees from pursuing any private business in India?

Ans- The All India Service Rules (Conduct) of 1968 prohibits Government employees from engaging in any trade or business. Other such rules such as Central Government (Conduct) Rules also prohibit the same. Government employees cannot do private business without the previous sanction from the government. The service rules are different for state government employees but state governments have modelled their rules on the Central Government rules.

Q. I have an excellent startup idea. However, I have heard that a Government employee cannot do any other private business in India. Can I go ahead with my startup?

Ans- All conduct rules by the Central and State Government specifically prohibit a Government employee from engaging in any trade or business. Furthermore, if you’re a state Government employee too, you cannot run a private business as all state governments have also prohibited such practice.

Q. I am a Central Government employee. Many times, I get offers for freelance opportunities. Can I work on such projects and take payment for the same?

Ans- No, you cannot work on any freelance projects. You cannot receive payment from any private person or body while you are working for any government. However, if the work is artistic, literary, or scientific in nature, you may do so.