New Rules of CSR Prepared for Companies

A high-level committee has prepared and handed over the rules to the government on how companies have to spend money on CSR. Know full details of these rules here.
New Rules of CSR Prepared for Companies

The High-Level Government Committee on Tuesday has recommended the expenditure on Corporate Social Responsibility (CSR) under the Companies Act to be exempted from tax and its compliance with the category of civil offense.

Under the Companies Act 2013, profit-making units are required to spend at least two percent of their three-year average net profit on CSR in the respective financial year.

The committee headed by Ingeeti Srinivas, Secretary, Ministry of Corporate Affairs, stressed that CSR expenditure should not be considered as a difference in funding for government schemes.

Srinivas submitted the report to Finance and Corporate Affairs Minister Nirmala Sitharaman on Tuesday. According to an official release, the committee recommended tax exemption on expenditure incurred under this head along with bringing it under the category of civil offense and fine system for non-compliance with CSR.

The release said that the committee's other recommendations include starting an impact assessment study for expenditure of Rs 5 crore or more under CSR and registration of implementing agencies on the portal of the Ministry of Corporate Affairs.

According to the report, companies that set an amount less than Rs 50 lakh under CSR can be exempted from the need to set up a CSR committee. The committee emphasized that the amount under CSR should be spent on providing unique technology-based solution system to solve social problems.

The committee was formed in October 2018 under the chairmanship of Srinivas to review the existing CSR framework and suggest suggestions for strengthening this system.

The committee members include Tata Sons chairman N Chandrasekaran, Bain Capital Private Equity managing director Amit Chandra, former Additional Solicitor General BS Narasimha, Luthra & Luthra Law Office founder and managing director Rajiv Luthra and Apollo executive vice president Shobhana Kamineni.

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