Compared to the original provision on CSR committees under the 2014 CSR Policy Rules, the new rules appear to be quite detailed. Former Rule 5 of the 2014 CSR Policy Rules vaguely mentioned that a transparent monitoring mechanism for CSR implementation had been introduced without specifying its requirements. The new rules make the process easier by specifying what the company must absolutely include in its action plan. CSR is a better way to serve society and make India a developed society. Thank you for adoption The education sector received the maximum funding (38 per cent of the total), followed by hunger, poverty and health care (25 per cent), environmental sustainability (12 per cent), rural development (11 per cent). Programs such as technology incubators, sports, armed forces that reduce inequality have seen negligible spending. Yes, the CSR provisions apply to a corporation registered for charitable purposes under section 8 of the Companies Act, 2013. Subsection 135(1) of the Act states that any corporation with reported net assets, income or net profit must establish a CSR committee. Therefore, Article 8 also requires companies to establish a CSR committee and comply with CSR regulations if it respects the reported net assets, turnover or net profit. Given recent changes to CSR regulations, industry research estimates that CSR compliance will improve by fiscal year 2019-2020, ranging from 97% to 98%.
10. If the undertaking is recognised as a holding company or subsidiary of an undertaking which meets the criteria set out in Article 135(1)(1) of the Treaty on European Union, the undertaking must be regarded as a holding company or a subsidiary of an undertaking which meets the criteria set out in Article 135(1). 1, even if the undertaking itself fulfils the criteria The fact that it is a holding company or a subsidiary of an undertaking which fulfils the criteria set out in Article 135(1) does not oblige the undertaking to comply with Article 135, unless the undertaking itself fulfils the criteria. The contribution to the «PM CARES Fund» is considered a CSR edition under item No. viii of Schedule VII of the Companies Act 2013 and was specified in Memorandum F. Office no. CSR-05/1/2020-CSR-MCA of 28 March 2020. In addition, the new rules specify that surpluses from CSR activities are not considered corporate profits and (i) either return to the same project or (ii) be transferred to the unspent CSR account within six months of the end of the financial year, or (iii) to a fund referred to in Annex VII. d) Companies can strengthen the CSR capacities of their own staff as well as those of their implementing bodies by institutions that have proven themselves in at least three financial years As originally proposed, the amending law would have provided for a criminal sanction in case of non-compliance, which could have resulted in a prison sentence of up to three years. This proposal is not one of the amendments that were finally adopted. The government monitors compliance with CSR regulations through corporate disclosures on the MCA portal. The government, after properly reviewing the files, can take action against non-compliant companies in the event of a violation of CSR regulations.
Can the payment of wages and salaries to workers and workers, including temporary agency work, be adjusted in relation to companies` CSR expenditures during the lockdown period? However, business expenditure on activities such as rural development, skills development, agricultural advisory projects, contributions to the Prime Minister`s National Relief Fund, etc. has benefited from the tax exemption under other relevant provisions of the Income Tax Law, such as Articles 80G and 35AC. The tax authorities contested the claim for deduction under Paragraph 80G on the ground that the `amounts paid` must have the character of a `gift` in order to be deductible under that section. It has been argued that a voluntary act by a donor is an essential element in treating an amount paid as a «gift». However, CSR expenses must be paid in accordance with the provisions of the Companies Act and should therefore not be allowed as a deduction under that section. 8. What tax benefits can be claimed under CSR? No specific tax exemption has been extended to CSR expenditure as such. The 2014 Finance Act also specifies that CSR expenditure is not part of business expenditure.
Although no specific tax exemption has been extended to CSR expenditures, expenditure on various activities such as contributions to the Prime Minister`s Relief Fund, scientific research, rural development projects, skills development projects, agricultural advisory projects, etc., which are listed in Annex VII, already benefit from exemptions under various articles of the Income Tax Act 1961. The new definition of «CSR policy» recognizes the importance of the CSR Committee`s recommendations. * Schedule VII of the Companies Act 2013 prescribes a number of activities that companies may include in their corporate social responsibility policies. Some of them include eradicating hunger, poverty and malnutrition, promoting education, ensuring environmental sustainability and balance, promoting gender equality and women`s empowerment, supporting former combatants of the armed forces and war widows, training to promote rural sports, etc. The impact assessment shall be carried out by an independent third party. 5.Can a company`s CSR expenses be reported as business expenses? The amount a business spends on CSR cannot be claimed as a business expense. The Finance Act 2014 provides that expenses incurred by an appraiser for corporate social responsibility activities referred to in section 135 of the Companies Act 2013 are not considered expenses incurred by the appraiser for the purposes of the business or profession. The funds indicated for the transfer of the unspent amount are: It is now mandatory for the companies concerned to devote at least 2% of the average net profit made over the following three years (the «Minimum CSR Amount») to CSR initiatives in accordance with the Company`s CSR Policy.
Unless a corporation is required to appoint an independent corporation, it must have two or more directors on its social responsibility committee. Previously, if a company was not able to fully spend its CSR funds in a given year, it could continue to execute the amount and spend it in the next fiscal year in addition to the money allocated for that year. The Companies Statute Law Amendment Acts, 2019 and 2020 resulted in significant changes to the CSR provision under section 135 of the Companies Act. In March 2020, the Ministry of Corporate Affairs (MCA) published the draft Corporate Amendment Rules (Corporate Social Responsibility Policy) («Draft Rules»)2, in which the public was invited to comment. Recently, on January 22, 2021, the MCA finally published the Companies (Corporate Social Responsibility Policy) Amendment Rules («New Rules»)3, which implement CSR changes through the Companies Amendment Acts of 2019 and 2020. Organizations in India have been very reasonable to take CSR initiatives and integrate them into their business processes. In addition, the training of Indian sports personnel representing a state or territory of the Union at national level or India at international level is an authorised CSR activity outside India. If the Company issues an amount that exceeds the MINIMUM amount of CSR, it is at the Company`s discretion to offset the excess by its spending needs over the next three fiscal years. The Company may decide to do so by decision of its Board of Directors. Rule 2(1)(d) of the Corporations (CSR Policy) Rules, 2014 defines CSR and excludes the following activities from consideration as eligible CSR activities: As a result of the new rules, corporate social responsibility is now defined in section 2(d) to refer to activities carried out by a company in accordance with its CSR obligation under the Companies Act. The amended rule also identifies the following activities that are not eligible for business CSR requirements: If a business does not comply with the amended CSR regulations, it may be fined up to twice the amount it must transfer to the government`s CSR fund or unspent CSR account, up to a maximum of INR 10 MILLION (approximately USD 136,400). Activities that can be included by companies in their corporate social responsibility policies Activities related to: It should be noted that the draft rules of procedure also proposed the participation of international organizations in the implementation of CSR projects that require prior approval from the government, but this was not communicated in the new rules.
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