The government is looking at providing various incentives, including tax breaks to corporates to carry out corporate social responsibility (CSR) programmes.
The move is expected to boost the involvement of India Inc in the CSR sector. Though most corporations are engaged in various forms of CSR activities, it lacks organised structure.
“It is important to incentivise the corporate sector for engaging in CSR activities, rather than just demanding it,” said Corporate Affairs Minister Salman Khursheed.
At present, trusts carrying out CSR activities get tax breaks but companies directly enjoy no significant incentives. For companies, the proposed direct tax code has underlined the need to do away with most exemptions. If it has to be given, the government would need to make the required changes in the Income Tax Act.
The new Companies Bill could also contain clauses pertaining to CSR, though the bill is still with the Standing Committee of Parliament.
Most companies carry out CSR programmes as part of their charitable activities, but a few like the ITC, Bharti Airtel and the State Bank of India have included them in their business models. Several companies have also used CSR activities for brand building purposes.
Earlier the government was also looking at a proposal to issue guidelines to public sector undertakings, specifying a minimum percentage of net profit to be directed in CSR.