Companies will ought to deposit their unused funds meant for corporate social responsibility [CSR] activities to a fund established by the govt. for better utilization of resources for public welfare, according to amendments to the companies Act approved by the cabinet on Wednesday.
The Companies [Amendment] Bill 2019 cleared by the cabinet will replace an ordinance issued earlier to help reduce the burden on special courts and to bring down applicable penalties for little corporations. additionally, it seeks to achieve some alternative changes to the law, which includes the provisions associated with CSR. The proposed amendment requires businesses to transfer the CSR amount allocated in specific years to a dedicated fund discovered by the govt. if the corporate could not utilize it for 3 years. this would bring accountability to the CSR activities of companies, aforementioned a government official who spoke on condition of anonymity.
Indian corporations pay around INR15,000 crore a year on CSR, according to info out there with the govt. The law mandates that corporations with a net worth of a minimum of INR 500 crore or revenue of INR 1,000 crore or net profit of INR 5 crore ought to pay a minimum of two percent of their net profit on CSR. Any failure during this regard ought to be explained within the annual budget.