A high level committee has proposed to make CSR (Corporate Social Responsibility) expenditure tax-deductible and allow companies to carry forward the unspent balance for a period of 3-5 years. 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. The committee recommendations aim to adopt sustainable development goals which would additionally include sports promotion, senior citizens' welfare, the welfare of differently-abled persons, disaster management and heritage protection, said a statement by the Ministry of Corporate Affairs. Balancing the local area preferences with national priorities, introducing impact assessment studies for CSR obligation of 5 crore or more, and registration of implementation agencies on MCA portal were also the highlights of the recommendations.
Further, there were several other recommendations such as developing a CSR exchange portal to connect contributors, beneficiaries and agencies, promoting social impact companies, and third-party assessment of major CSR projects. The committee has strongly objected to treating CSR as a means of resource gap funding for government schemes. Also, the committee discouraged passive contribution of CSR into different funds included in Schedule 7 of the Act.
The committee has underlined that the CSR spending should be a board-driven process to provide innovative technology-based solutions for social problems. It has also recommended that companies having CSR prescribed amount below Rs. 50 lakh may be exempted from constituting a CSR Committee. Recommendations also state that the violation of CSR compliance may be made a civil offense and shifted to the penalty regime.
Previously, there was unrest among corporates after the government brought in a provision of jail up to three years for not complying to the revised CSR norms. However, a few days later Nirmala Sitharaman said that there will be no penalty for failing to meet the revised CSR norms. Amid a slowdown in the demand and production, the government has met representatives from different sectors of the economy in the last few days. Nirmala Sitharaman has also assured the industrialists to provide all the possible support to them. The government has also requested banks to pass on the benefits of the rate cut to boost growth and utilise excess liquidity in the system.