The committee chaired by Corporate Affairs Ministry Secretary Injeti Srinivas in its report submitted on August 2019 has recommended that in case of violation of CSR provisions, penalty may be imposed instead of imprisonment.
In respect of tax benefit for CSR activities, the committee has recommended that all activities listed under Scheduled VII of the Companies Act, 2013 to enjoy uniform tax benefit and CSR expenditure to be made deductible from the income earned for the purpose of taxation.
“The Ministry of Corporate Affairs is considering these recommendations for implementation,” the official said.
During the monsoon session of Parliament, Minister of State for Finance and Corporate Affairs Ministry Anurag Singh Thakur had informed that the government was looking into the committee’s recommendations.
The committee has also suggested a provision to carry forward unspent CSR balance for three to five years.
According to the new CSR norms under Section 135 of the Companies Act, a company has to earmark a part of its profit for social activities and transfer all unspent amount to an escrow account if it is an ongoing project.
This account will be opened by the company concerned in a bank and be called the unspent corporate social responsibility account.
The CSR expenditure which remains unspent in three years would be transferred to any fund specified in Schedule VII of the Companies Act such as the Swachch Bharat Kosh, the Clean Ganga Fund, and the Prime Minister’s Relief Fund.
The central government funds should be discontinued as CSR spend, the committee report said and instead a special designated fund should be created for transfer of unspent CSR money beyond three to five years.
The committee has recommended that Schedule VII be aligned with the sustainable development goals to include sports promotion, senior citizens’ welfare, welfare of differently abled persons, disaster management, and heritage protection.
According to the government data, of the total 21,337 companies liable for CSR 9,753 companies did not report CSR activity in 2017-18.
The other recommendations of the committee include developing a CSR exchange portal to connect contributors, beneficiaries and agencies, allowing CSR in social benefit bonds and promoting social impact companies.
The committee constituted in October, 2018 has among its members N Chandrasekaran, chairman, Tata Sons, and Amit Chandra, managing director, Bain Capital Private Equity, among others.
