New Delhi: A government-constituted high level panel on Tuesday recommended making expenditure on CSR tax deductible as well as treat non-compliance with CSR requirements a civil offence under the companies law.
Under the Companies Act, 2013, certain classes of profitable entities are required to spend at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) in a particular financial year.
The panel, headed by Corporate Affairs Secretary Injeti Srinivas, has stressed that CSR expenditure should not be treated as a means of resource gap funding for government schemes.
On Tuesday, Srinivas presented the report to Finance and Corporate Affairs Minister Nirmala Sitharaman.
Apart from recommending that violation of CSR compliance might be made a civil offence and shifted to the penalty regime, the panel has also pitched for "making CSR expenditure tax deductible", according to an official release.
Noting that the committee has made far reaching recommendations, the release said the main suggestions include introduction of impact assessment studies for CSR obligation of Rs 5 crore or more, and registration of implementation agencies on the corporate affairs ministry's portal.
Companies having CSR prescribed amount below Rs 50 lakh can be exempted from the need of constituting a CSR committee, as per the report.
"The committee discourages passive contribution of CSR into different funds included in Schedule VII of the Act. It has emphasised on CSR spending as a board driven process to provide innovative technology-based solutions for social problems," it said.
The panel was set up in October 2018 under the chairmanship of Srinivas to review the existing CSR framework and make recommendations on strengthening the CSR ecosystem, including monitoring implementation and evaluation of outcomes.
Tata Sons Chairman N Chandrasekaran, Bain Capital Private Equity MD Amit Chandra, former Additional Solicitor General of India B S Narasimha, Luthra and Luthra Law Office Founder and MD Rajeev Luthra, and Apollo Executive Vice Chairperson Shobana Kamineni were among the panel members....