Corporate Social Responsibility (CSR)
The Companies Act 2013 (Companies Act) has introduced several new provisions which transpiration the squatter of Indian corporate business. One of such new provisions is Corporate Social Responsibility (CSR). The concept of CSR rests on the ideology of requite and take. Companies take resources in the form of raw materials, human resources etc. from the society. By performing the task of CSR activities, the companies are giving something when to the society. Ministry of Corporate Affairs has notified Section 135 and Schedule VII of the Companies Act as well as the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014 (CRS Rules) which has come into effect from 1 April 2014. In the pursuit paragraphs, I will discuss various aspects of CSR activities.
The pursuit companies are required to constitute CSR committee –
1. Companies with net worth of Rs. 500 crores or more, or
2. Companies with turnover of Rs. 1000 crores or more, or
3. Companies with net profit of Rs. 5 crores or more.
If any of the above criteria is fulfil, the CSR provisions and related rules will be applicable to the company. These companies are required to form CSR committee consisting of its directors. This committee are responsible to take care of CSR activities.
Duties of Board of Directors
The Board of Directors shall discharge following duties in CSR activities. The role of Board of Directors are as follows –
1. Approve CSR policy.
2. Ensure its implementation.
3. Disclose the contents of CSR policies in its report.
4. Place the same on Company’s website.
5. Ensure that statutory specified value is spend by the company on CSR activities.
It’s important to note that presently there is no penalty if the specified value is not spending on CSR activities., however In such case the board’s report should specify the reason for such noncompliance.
CSR – Spending, Policies & Activities
Few important points of CSR spending are as follows –
As per schedule VII, the pursuit activities may be included by companies in their CSR policies:
Net Profit Considered for CSR Spending
Net Profit ways the net profit of a company as per its financial statement prepared in vibrations with
Section 198 of the Act, but shall not include the following, namely: ‐
Following shall not be considered as expenditure:
CSR Clarification on spending of CSR funds for Awareness and public outreach on COVID-19 Vaccination programme
Filing of Form CSR 1
(Pursuant to section 135 of the Companies Act, 2013 and Rule 4(1) and
(2) of Companies (CSR Policy) Rules, 2014)
Form CSR-1 and availability of Form CSR-1 on MCA Portal
As per rules issued by MCA there is no due stage specified for filing of Form CSR-1 with MCA but from 01.04.2021 CSR Funding will be released only to that NGOs, that are registered with MCA by filing Form CSR-1.
So, if you want CSR Funding then it is mandatory for you to get registered with MCA by Filing Form CSR-1 as soon as possible. And Form CSR-1 is now available for Filing on MCA Portal.
Following type of NGO’s are eligible to file Form CSR-1 on MCA Portal for getting CSR Funding
(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 withal 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
Following documents are required for filing Form CSR-1
1. Copy of PAN Card of the NGO/Entity
2. Mail ID and Mobile Number of authorised representatives of NGO
3. Details of Governing Body Members including their Name, DIN/PAN and Email ids.
4. Copy of Registration Certificate
5. Digital Signature of the Authorised Person with his DIN/PAN Number
1. The Mail ID and Mobile Number of authorised representatives of NGO shall be verified by the MCA through OTP.
2. Certification of Form CSR-1 is Mandatory for all entities, either through any of practicing CA/CS/CMA.
DISCLAIMER: The entire contents have been developed on the basis of relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors expressly disclaim all or any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document. Reader should seek appropriate counsel for their own situation. I shall not take any responsibility or shall be held liable for any of the consequences directly or indirectly.