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via Key Amendments to CSR Law in India – The CSR Journal

The STIGMA that CSR funds are used for MONEY LAUNDERING remains. Ask any NGO promoter in private.

The year 2019 saw startling changes and additions to CSR law in India. Parliament passed amendments to the Companies Act to strengthen laws governing corporate social responsibility (CSR). There was drama over whether the govt. will impose imprisonment for non-compliance.

The penal provision was done away with eventually. While Corporate India was thrilled about this, many economy watchers wonder whether the government did a rush job in going in for legal amendments in July 2019 to declare stiff penalties.

Exemptions to Start-ups

This applies to complying corporations which are freshly incorporated and have not completed 3 years of establishment. The amount to be spent on CSR activities will be equivalent to 2% of the net profits made by the company in the previous financial year as compared to 2% of the average net profits made by the company in the 3 immediately preceding financial years.

Carry Forward of Unspent CSR Funds

If there are any unspent CSR funds during a financial year with respect to the “ongoing project”, the company must transfer the amount to a special CSR Unspent Account within 30 days from the end of the financial year. The proceeds from the account must be utilized by the company in the period of the next 3 financial years.

If the company fails to do so, the amount must be transferred to the fund specified under the Schedule VII of the Companies Act, 2013 known as Prime Minister’s National Relief Fund or any fund used for socio-economic purpose by the Central Government within 30 days from the date of completion of the third financial year. This is also linked to the disclosure on unspent amounts.

Penalty

According to CSR law in India, if the company fails to comply with the provision relating to creation of the CSR Committee, the amendments provide for the imposition of a penalty of not less than INR 50,000 (but which may extend upto INR 2.5 million) along with a fine of not less than INR 50,000 (which may extend to INR 5,00,000).

Compliance Monitoring

The Central Government has been empowered to make rules and issue directions to ensure compliance. This provision is ambiguous and potentially dangerous.Could this legally permit Central Government to issue general or special directions to a company or class of companies (PSUs for example) to contribute towards a specific government programme or project?

Criticism of CSR Law in India

One of the most vital issues about CSR law in India remains that the spending corporate gets no specific tax exemptions as the same does not fall within the definition of business expenditure.

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IGNORE to kill is the best policy advocated by CHANAKYA.

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Have you ever wondered: Am I a human being? Ze Frank suggests a series of simple questions that will determine this. Please relax and follow the prompts. Let’s begin …

This talk was presented at an official TED conference, and was featured by our editors on the home page.

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The Japanese presence near Houston was commemorated in postcards. COURTESY MEGAN WHITE

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