High Level Committee recommends CSR expenditure to be made tax deductible
High Level Committee (HLC) on Corporate Social Responsibility (CSR) constituted by Ministry of Corporate Affairs recommended making CSR expenditure tax deductible and to make compliance violations as a civil offence that attracts penalties. Corporate Affairs Secretary Injeti Srinivas presented the Report of the High Level Committee on CSR to Union Finance Minister Nirmala Sitharaman.
High Level Committee on CSR was constituted in October 2018 under Chairmanship of Secretary (Ministry of Corporate Affairs) to review existing CSR framework and make recommendations on strengthening CSR ecosystem, including implementation, monitoring and evaluation of outcomes.
Key Recommendations of Committee
Make CSR expenditure tax deductible.
Allow carry-forward of unspent balance for a period of 3-5 years.
Allow CSR in social benefit bonds.
Promote social impact companies.
Third party assessment of major CSR projects.
Align Schedule 7 of Companies Act (which outlines the kinds of activities that qualify as CSR) with United Nations Sustainable Development Goals (SDG).
Companies that have a CSR-prescribed amount less than Rs.50 lakh may be exempted from constituting a CSR Committee.
Violation of CSR compliance may be made a civil offence and shifted to penalty regime.
It also recommends registration of implementation agencies on Union Ministry of Corporate Affairs (MCA) portal.
Balancing priorities: Report recommends balancing local area preferences with national priorities when it comes to CSR. It also suggests introducing impact assessment studies for CSR obligations of Rs.5 crore or more.
Develop CSR exchange portal to connect contributors, beneficiaries and agencies.
Committee report emphasizes on not treating CSR as a means of resource gap funding for government schemes.
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Month: Current Affairs - August, 2019