CSR Expenditure to be Made Tax Deductible: Report

The Committee has made far-reaching recommendations. The main recommendation is making CSR expenditure tax-deductible.

CSR Expenditure to be Made Tax Deductible: Report

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On August 13, 2019, Injeti Srinivas, Secretary (Corporate Affairs), presented the Report of the High-Level Committee on Corporate Social Responsibility (CSR) to Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs.

The Committee has made far reaching recommendations. The main recommendations include, 
  • Making CSR expenditure tax deductible,
  • Provision for carry forward of unspent balance for a period of 3 – 5 years, 
  • Aligning Schedule 7 with the SDGs by adopting a SDG plus framework (which would additionally include sports promotion, Senior Citizens’ welfare, welfare of differently abled persons, 
  • Disaster management and heritage protection), 
  • Balancing 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. 
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 Committee has emphasized 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.

About the High-Level Committee on CSR


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, 
  • Dr. A.K. 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,   
  • Prof. Anil Gupta, Founder, Honey Bee Network and Professor, IIM, Ahmedabad, 
  • Dr. Narinder Dhruv Batra, President, Indian Olympic Association,
  • S. Santhanakrishnan. Chartered Accountant, 
  • Mathew Cherian, CEO, Helpage India. 
  • Gyaneshwar Kumar Singh, Joint Secretary, Ministry of Corporate Affairs (& Convener)


Parallel Development


As per the latest news, the Government of India (GoI) will not operationalize the new CSR provisions in the recently amended Companies Act that make violations punishable by jail. The government will not issue followup rules required to implement the provisions that had drawn sharp criticism. 
Name

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IndraStra Global: CSR Expenditure to be Made Tax Deductible: Report
CSR Expenditure to be Made Tax Deductible: Report
The Committee has made far-reaching recommendations. The main recommendation is making CSR expenditure tax-deductible.
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