Govt amends CSR rules, decriminalizes provisions

Govt amends CSR rules, decriminalizes provisions
The government has amended rules governing corporate social responsibility (CSR), including decriminalizing non-compliance with CSR provisions, allowing corporates to undertake multi-year projects and making registration compulsory for agencies implementing CSR activities on behalf of companies.

Besides, companies have been permitted to set off the excess amount spent under CSR up to three succeeding financial years and they have also been allowed to create or acquire capital assets through CSR in the name of beneficiaries or a public authority or registered trust, among others.

These amended rules called The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 have come into effect from January 22.

As per the amended rules, non-compliance with CSR provisions has been decriminalized by shifting such offences to penalty regime, while companies having CSR obligation below Rs 50 lakhs have been exempted from constituting a CSR Committee.

Under the Companies Act, 2013 — being implemented by the corporate affairs ministry — certain class of profitable companies are required to shell out at least two per cent of their three-year annual net profit towards CSR activities in a financial year.

To make the CSR framework more transparent, the amended rules specify that agencies implementing CSR projects for companies should get registered with the corporate affairs ministry’s MCA 21 portal and the system will automatically generate a unique CSR registration number.

The registration requirement will be effective from April 1, 2021.

To bring in the best international practices in the field of CSR and capacity building, the amend rules allow international organizations to carry out designing, monitoring and evaluation of the CSR projects or programmes. However, they cannot act as implementing agencies.

Besides, disclosure requirements have been enhanced with respect to CSR projects.

As per the amended rules, there will be impact assessment of CSR projects that will help companies to plan and allocate resources in a better manner. The assessment will be applicable subject to various conditions.

The CSR provisions came into force from April 1, 2014. The CSR expenditure has increased from Rs 10,066 crore in 2014-15 financial year to Rs 18,655 crore in 2018-19 and a cumulative total of Rs 79,000 crore has been spent throughout the country, as per the official data.
Today's Quote
"CSR is a hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it because it is good for our business."
Niall FitzGerald
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