Companies may get tax benefits for their expenditure on corporate social responsibility. Corporate affairs minister Sachin Pilot, who met leaders of corporate India on Tuesday, said that he would take up the issue with the finance ministry.
“This is one issue that came up in the meeting and I intend taking it up with the finance ministry,” Pilot said.
Under the new Companies Bill, pending in Parliament, profitable companies would be mandated to spend 2% or more of their profits on CSR activities.
Companies would also have to present elaborate and separate audit reports for their CSR programmes to ensure greater transparency and disclosure. Companies that fail to spend on CSR without extending any explanation would be
“In case the companies do not spend, they would also need to explain why they have not been able to spend on CSR,” Pilot said, adding that non reporting and non compliance would attract Section 134 of the Companies Act which means that the company can be punishable with fine of not less than Rs.25, which could even extend to Rs.25 lakh, but, more importantly, every officer who defaults would be punishable with imprisonment for a term which may extend to three years.
The minister also said that CSR activities would need to be project driven. At present, companies are only required to make a mention of their CSR activities and the quantum of money that is being directed towards it. There is no separate audit for CSR.