Panel asks government to make CSR spend tax deductible
NEW DELHI: In what may come as a major relief for India Inc, a high-powered committee on Corporate Social Responsibility (CSR) recommended on Tuesday that the Central government should make expenditure on CSR tax deductible, allow the companies to carry forward unspent balance for three-to-five years, and treat non-compliance of CSR obligation as civil offence.
“The main recommendations include making CSR expenditure tax-deductible, provision for carrying forward unspent balance for a period of 3-5 years,” said the statement from the Ministry of Corporate Affairs (MCA), after the panel headed by MCA secretary Injeti Srinivas submitted its report.
Under the Companies Act, 2013, certain classes of profitable entities are required to spend at least 2 per cent of their three-year annual average net profit towards Corporate Social Responsibility in a particular financial year.
“The committee has also recommended that violation of CSR compliance may be made a civil offence and shifted to the penalty regime,” the statement said.
The sweeping recommendations may come as a major relief to companies worried about meeting stringent CSR norms or facing penalties, announced recently by Finance Minister Nirmala Sitharaman.
Just last month, the Parliament had passed amendments to the Companies Act, under which unspent CSR allocations would have to be transferred to a fund specified by the government and with harsh riders for corporates.
The amended rules invite a three-year jail term and penalty of Rs 50,000 to Rs 5 lakh or both for company executives, and a penalty between Rs 50,000 and Rs 25 lakh for employers who breach CSR rules.
India Inc last week had already flagged its concerns to the Finance Minister, who had promised to look into their concerns. It also has recommended introducing impact assessment studies for CSR obligation of Rs 5 crore or more and registration of implementation agencies on MCA portal.