Panel For Tax on CSR Spend

The High Level Committee on Corporate Social Responsibility (CSR) constituted by the Finance Ministry has recommended a tax on CSR spend.

The committee headed by Corporate Affairs Secretary Injeti Srinivas suggested that CSR spends should become eligible for tax deduction under income tax law.
Currently, income tax law does not apply to CSR expenses.
This comes at a time the central government has recently amended the Company Law to make CSR spend mandatory for companies and making it a criminal offence in case of non-compliance.
The Committee was constituted to review the current CSR framework and suggest ways to strengthen the CSR ecosystem including implementation, monitoring and evaluating.

The Committee also recommended

Provision for carrying forward of unspent balance for a period of 3-5 years.
- Aligning schedule VII with the Sustainable Development Goals (SDGs) by adopting an SDG plus framework. The Framework includes sports promotion, the welfare of differently-abled persons, heritage protection, Senior Citizens’ welfare, and disaster management.
- Balancing local area preferences with national priorities.
- Impact assessment studies for CSR obligation that are exceeding more than Rs. 5 crores.
- Registration of implementation agencies on MCA portal.
- Develop a CSR portal for connecting contributors, agencies and beneficiaries.
- CSR in social benefit bonds.
- Promoting social impact companies.
- Third-party assessment of major CSR projects.
The committee is not in favour of treating CSR as a resource gap funding for government schemes.
It also does not want CSR contribution into various funds under Schedule VII of the Companies Act.
It wants CSR to be a board-driven process and find innovative technological solutions for social problems.
The Committee does not want a company to constitute a CSR committee if its CSR contribution is below RS. 50 lakh.
It recommended making violation of a CSR compliance a civil offence.