CORPORATE SOCIAL RESPONSIBILITY

CORPORATE SOCIAL RESPONSIBILITY

TOPIC: Polity

Context-  The Centre has now mandated corporate India to furnish a comprehensive report on their corporate social responsibility (CSR) activities. It is expected to give the government a comprehensive picture of the CSR funds spent and activities carried out.

Concept-

CSR spending:

• The Companies Act 2013 requires companies with a net worth of ₹500 crore of more, or turnover of ₹1,000 crore or more or a net profit of ₹5 crore or more during the immediately preceding three years to spend 2 per cent of the average net profit on CSR activities.
  • such expenses would not be eligible for deduction under section 37 and section 80G of the Income Tax Act.
  • Tax Exemptions under Section 80D clearly prescribes only two instances (i.e. contribution towards the Swachh Bharat Koshand Clean Ganga Fund) in respect of which deduction under section 80G is not permissible if sum spent by the assessee is in pursuance of CSR.
• In India, the concept of CSR is governed by clause 135 of the Companies Act,
• India is the first country in the world to statutorily mandate CSR spending along with a framework to identify potential CSR activities.
• The existing framework under the CSR rules already obligates a company to file a detailed report of its CSR activities, to be annexed to the board report.
• The Act requires companies to set up a CSR committee which shall recommend a Corporate Social Responsibility Policy to the Board of Directors and also monitor the same from time to time.

Injeti Srinivas Committee:

• A High Level Committee on CSR was formed in 2018 under the Chairmanship of Injeti Srinivas.
• The main recommendations included
  • making CSR expenditure tax deductible,
  • allowing the carry-forward of unspent balance for a period of 3-5 years, and
  • aligning Schedule VII of the Companies Act with the United Nations Sustainable Development Goals.