The high level committee on corporate social responsibility (CSR) submitted its report to Finance and Corporate Affairs minister Nirmala Sitharaman on Tuesday. The chairman of the committee and Corporate Affairs secretary, Injeti Srinivas, submitted the report highlighting the key recommendations for the consideration of the government.
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Confirming CNBC-TV18 newsbreak, the committee has recommended allowing carry forward the unspent CSR balance for 3-5 years and failing this, the amount will be transferred to a fund to be designated by the government to be spent on innovative, high impact projects.
What will come as a major relief for the corporate sector, the recommendations say that CSR noncompliance will have a penalty of maximum of Rs 1 crore, with no imprisonment.
Some other key suggestions include introducing impact assessment studies for CSR obligation of Rs 5 crore or more and registration of implementation agencies on MCA portal. Most importantly there is a suggestion to make expenditure a tax deductible expenditure as reported by CNBC-TV18 earlier.
“The Committee has made far reaching recommendations…The other recommendations include developing a CSR exchange portal to connect contributors, beneficiaries and agencies, allowing CSR in social benefit bonds, promoting social impact companies, and third party assessment of major CSR projects,” the ministry of corporate affairs said in a press release.
“The Committee has emphasised on not treating CSR as a means of resource gap funding for government schemes. The Committee discourages passive contribution of CSR into different funds included in Schedule VII of the Act. It has emphasized on CSR spending as a board driven process to provide innovative technology based solutions for social problems. The Committee has also recommended that companies having CSR prescribed amount below Rs 50 lakh may be exempted from constituting a CSR Committee. The Committee has also recommended that violation of CSR compliance may be made a civil offence and shifted to the penalty regime,” the MCA press release added.
The report also confirms that the committee has recommended having an annual CSR survey on the lines of Economic Survey to be prepared by Ministry of Corporate Affairs, expanding the scope of CSR to LLPs (limited liability partnerships), which are under the purview of MCA, to banks registered under Banking Regulation Act and to other similar entities not covered under the Companies Act.
The High Level Committee on CSR was constituted in October, 2018 under the Chairmanship of Secretary (Corporate Affairs) to review the existing CSR framework and make recommendations on strengthening the CSR ecosystem, including monitoring implementation and evaluation of outcomes. The Members of the Committee included Sameer Sharma, DG & CEO, Indian Institute of Corporate Affairs, AK Mittal, former CMD, NBCC, N. Chandrasekaran, Chairman, Tata Sons, Amit Chandra, MD, Bain Capital Private Equity, B.S. Narasimha, former Addl. Solicitor General of India, Rajeev Luthra, Founder & MD, Luthra and Luthra Law Office, Shobana Kamineni, Executive Vice Chairperson, Apollo, Anil Gupta, Founder, Honey Bee Network and Professor, IIM, Ahmedabad, Narinder Dhruv Batra, President, Indian Olympic Association, S. Santhanakrishnan. Chartered Accountant, and Mathew Cherian, CEO, Helpage India. Gyaneshwar Kumar Singh, Joint Secretary, Ministry of Corporate Affairs, who was the member and convener.
Some of the other recommendations made by the committee include: