Comparative study on Schedule VII of Companies Act, 2013 vis-a- vis UN SDG vis vis Income Tax Provision (refer to provisions relating to Charitable Institutions / Trusts / NGOs / Section 8 companies) and also mention projects / activities, clause wise, which can be covered under the different Clauses of Schedule VII presented in tabular form.

Firstly define the terms CSR/Schedule-VII and Income tax provisions.

Corporate Social Responsibility: CSR is in essence their concern is about the effect a business has on society and in turn society’s expectations from them. The origins of CSR can be traced to philanthropic activities, charity support and relief work by businesses. All this is considered under the umbrella term of ‘social responsibility of business’. Over time, this has evolved to encompass critical concepts like triple bottom line, philanthropy, corporate sustainability and business responsibility. CSR activities are being integrated into the core business strategies of many companies in order to maximize their value and to manage various stakeholders.

CSR has been defined in Companies (Corporate Social Responsibility Policy) Rules, 2014 (‘Rules’) in an inclusive manner as follows:

“Corporate Social Responsibility (CSR) means and includes, but is not limited to –

(i) Projects or programmes relating to activities specified in Schedule VII to the Act; or

(ii) Projects or programmes relating to activities undertaken by the Board of Directors of a company (Board) in pursuance of recommendations of CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will cover subjects enumerated in Schedule VII of the Act .”

Schedule VII of Companies: Indian Companies Act 2013 mandated a compulsory CSR spend under section 135 of the said Act. As per Companies Act, 2013 that every company that meets with either one of the three conditions of turnover (Rupees One thousand crore or more) or net profit (Rupees five crore or more) or net worth (Rupees five hundred crore or more) in a financial year, the company shall mandatory comply the CSR provision shall create a ‘corporate social responsibility committee’ at the board level with at least three directors and at least one of them should be an independent director. It will be the committee’s responsibility to create a CSR policy along with the activities to be undertaken from amongst the list of activities given in schedule VII of the act and recommend to the board for implementing.

UN SDG: Sustainable Development Goal were adopted on 25 september,2015 by 193 country to end poverty, protect the planet, and ensure prosperity for all as part of new sustainable development Agenda. These goals focus on mobilizing effort globally to end poverty and create a life of dignity and opportunity for all. The realizations of these goals call for collective action by Government, Businessman and Civil Society, wherein they can jointly foster solutions for a common theme of sustainable development. The SDGs were set up in 2015 by the United Nations General Assembly and are intended to be achieved by the year 2030. They are included in a UN Resolution called the 2030 Agenda or what is colloquially known as Agenda 2030. The SDGs were developed in the Post-2015 Development Agenda as the future global development framework to succeed the Millennium Development Goals which ended in 2015. Now Global Goals are a collection of 17 interlinked global goals designed to be a “blueprint to achieve a better and more sustainable future for all. These goals set a clear road map by which optimum growth can achieve, making earth be better place. However achievement may not be possible with government initiatives alone, it needs a high level collaboration between government, private sector and the civil society.

Income Tax provision on CSR:

Section 2(15) of the Income-tax Act defines charitable purpose for the purpose of the Act and includes relief of the poor education, medical relief and the advancement of any other object of general public utility.

Expenditure on CSR activities is non-deductible for tax purposes unless falling within provisions of Sections 30 to 36 of the Income Tax Act, 1961.Only expenditure which are deductible expenses under provisions of Section 35 of the Income Tax Act, 1961.

COMPARATIVE STUDY CSR ACTIVITY IN DIFFERENT LAWS:

Sl. No. Schedule VII of Companies Act,2013 UN SDG provision Income Tax Provision
i) Eradicating hunger, poverty and nutrition (Promoting health care including preventive health care) and sanitation (including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation) and making available safe drinking water. No Poverty Relief to the poor
ii) Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects. Zero Hunger, Zero Hunger,
iii) Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups. Good Health and Well-being, Medical relief
iv) Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water [including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga] Quality Education, Preservation of environment (including water sheds, forests and wild life)
v) Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional art and handicrafts Gender Equality, Preservation of monuments or places or objects of artistic or historic interest, and
vi) Measures for the benefit of armed forces veterans, war widows and their dependents, [ Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows]; Clean Water and Sanitation, Any other object of general public utility.
vii) Training to promote rural sports, nationally recognized sports, paralympic sports and olympic sports. Affordable and Clean Energy,
viii) Contribution to the prime minister’s national relief fund 8[or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)] or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women; Decent Work and Economic Growth,
ix) (a) Contribution to incubators or research and development projects in the field of science, technology, engineering and medicine, funded by the Central Government or State Government or Public Sector Undertaking or any agency of the Central Government or State Government; and (b) Contributions to public funded Universities; Indian Institute of Technology (IITs); National Laboratories and autonomous bodies established under Department of Atomic Energy (DAE); Department of Biotechnology (DBT); Department of Science and Technology (DST); Department of Pharmaceuticals; Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH); Ministry of Electronics and Information Technology and other bodies, namely Defense Research and Development Organisation (DRDO); Indian Council of Agricultural Research (ICAR); Indian Council of Medical Research (ICMR) and Council of Scientific and Industrial Research (CSIR), engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs). Industry, Innovation and Infrastructure,
x) Rural development projects Reducing Inequality,
xi) Slum area development. Explanation.- For the purposes of this item, the term `slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force. Sustainable Cities and Communities,
xii) Disaster management, including relief, rehabilitation and reconstruction activities. Responsible Consumption and Production,
xiii) Climate Action,
xiv) Life Below Water,
xv) Life On Land,
xvi) Peace, Justice, and Strong Institutions,
xvii) Partnerships for the Goals.

Conditions attached to eligible trust/society/section 8 company for CSR activities

As per guidelines issued by MCA, From 1st April 2021, CSR Funding will be released only to that NGOs, Trusts, Religious Trusts, Societies and section 8 company that are registered with MCA and also 12AA registered entities, 80 G granted entities by filing Form CSR-1.So, if such institutions willing to receive CSR Funding then it is mandatory for them to get registered with MCA by Filing Form CSR-1 as soon as possible. And Form CSR-1 is now live for Filing on MCA Portal. Neither there is any date prescribed nor is any fee prescribed.

Eligibility to file CSR-1.

(a) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961 (43 of 1961), established by the company, either singly or along with any other company, or

(b) a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or

(c) any entity established under an Act of Parliament or a State legislature; or

(d) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities

Filing CSR-1

Eligible entities cannot file Form CSR-1 directly with MCA. Form CSR-1 is to be signed digitally by the authorised person of NGO and a practicing professional. The Professional may be Chartered Accountant/ Company Secretary/ Cost Accountant who is in whole time practicing. The following documents are required for filing Form CSR-1

1. Copy of PAN Card of the NGO

2. Mail ID and Mobile Number

3. Details of Governing Body Members

4. Copy of Registration Certificate

5. Digital Signature of the Authorized Person with his PAN Number

6. If the trust is related to any corporate, then the details of the Corporate with CIN are required to be mention in the form.

Caution: Attention is drawn to provisions of Section 448 and 449 of the Act which provide for punishment for false statement / certificate and punishment for false evidence respectively.

Summary: For successful implementation of CSR policy need a collective approach by the stakeholders. The stakeholders may design a road map make the journey easy and achievable at an accelerated pace.

Author Bio

Qualification: CA in Practice
Company: KUMAR TIWARI & CO.
Location: EAST DELHI, Delhi, India
Member Since: 03 May 2021 | Total Posts: 2
I am CA MANOJ KUMAR qualified at 2011 and start practicing in Delhi. I am practicing as GST practitioner. View Full Profile

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