Category: Laws

The government has amended rules governing corporate social responsibility (CSR), including decriminalizing non-compliance with CSR provisions, allowing corporates to undertake multi-year projects and making registration compulsory for agencies

The government has amended rules governing corporate social responsibility (CSR), including decriminalizing non-compliance with CSR provisions, allowing corporates to undertake multi-year projects and making registration compulsory for agencies implementing CSR activities on behalf of companies.

Besides, companies have been permitted to set off the excess amount spent under CSR up to three succeeding financial years and they have also been allowed to create or acquire capital assets through CSR in the name of beneficiaries or a public authority or registered trust, among others.

These amended rules called The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 have come into effect from January 22.

As per the amended rules, non-compliance with CSR provisions has been decriminalized by shifting such offences to penalty regime, while companies having CSR obligation below Rs 50 lakhs have been exempted from constituting a CSR Committee.

Under the Companies Act, 2013 — being implemented by the corporate affairs ministry — certain class of profitable companies are required to shell out at least two per cent of their three-year annual net profit towards CSR activities in a financial year.

To make the CSR framework more transparent, the amended rules specify that agencies implementing CSR projects for companies should get registered with the corporate affairs ministry’s MCA 21 portal and the system will automatically generate a unique CSR registration number.

The registration requirement will be effective from April 1, 2021.

To bring in the best international practices in the field of CSR and capacity building, the amend rules allow international organizations to carry out designing, monitoring and evaluation of the CSR projects or programmes. However, they cannot act as implementing agencies.

Besides, disclosure requirements have been enhanced with respect to CSR projects.

As per the amended rules, there will be impact assessment of CSR projects that will help companies to plan and allocate resources in a better manner. The assessment will be applicable subject to various conditions.

The CSR provisions came into force from April 1, 2014. The CSR expenditure has increased from Rs 10,066 crore in 2014-15 financial year to Rs 18,655 crore in 2018-19 and a cumulative total of Rs 79,000 crore has been spent throughout the country, as per the official data.

In a major relief to the Tata Education and Development Trust, the Income Tax Appellate Tribunal (ITAT) in Mumbai ordered that over Rs 220 crore of the Trust’s income exempted from tax in a case related to the assessment years 2011-12 and 2012-13

In a major relief to the Tata Education and Development Trust, the Income Tax Appellate Tribunal (ITAT) in Mumbai ordered that over Rs 220 crore of the Trust’s income exempted from tax in a case related to the assessment years 2011-12 and 2012-13.

The ITAT’s Mumbai bench gave a ruling on July 24 in favour of the Trust in their appeal against commissioner income tax (CIT) order wherein a demand of more than Rs 220 crore was levied by the tax department.

ITAT also stayed the matter of that demand without any minimum pay, the government said in statement.

The case pertains to assessment years 2011-12 and 2012-13 on money spent by the Trust for creating an endowment fund at the US-based Cornell University to provide scholarships to Indian students, and granting financial assistance to the Harvard Business School for constructing an executive building to be named Tata Hall.

The Trust had donated Rs 197.79 crore in 2011-12 and Rs 25.37 crore in 2012-13.

In the order, itat said: “…this wholly avoidable litigation which does not only clog the serious litigation before the judicial forums but also diverts scarce resources of the philanthropic bodies, like the assessee before us, to the areas which do no good to the society at large.”

The Tribunal hoped that the admirable work being done by the Government of India, in pursuing such forward looking policies at the macro level, is not allowed to be overshadowed by the isolated situations like this, at the field level, which must be minimized by sensitising the authorities concerned.

“An effort should be made to create a taxpayer friendly atmosphere by adopting just and fair approach at every level of the tax administration,” it observed.

The government said that the controversy began after the Public Account Committee (PAC) of the Lok Sabha in 2018 sought an enquiry in the matter as it believed that exemption granted by the direct tax body was in violation of the Income Tax Act.

Concluding the matter, ITAT said that all other grounds of appeals will be “rendered, academic and infructuous”.

“We have decided this issue in favour of the assessee and thus allowed this ground of appeal. We, therefore, uphold the plea of the assessee, and delete the resultant disallowance of claim of exemption,” it added.

The detailed ruling of Appellate Tribunal may be accessed by clicking on link.

FAQs on eligibility of CSR expenditure related to COVID-19 activities
In a set of FAQs issued by the Ministry of Corporate Affairs clarified that which COVID-19 related expenditures would qualify under the ‘corporate social responsibility’ (CSR) guidelines. As you may be aware, CSR has been made mandatory

In a set of FAQs issued by the Ministry of Corporate Affairs clarified that which COVID-19 related expenditures would qualify under the ‘corporate social responsibility’ (CSR) guidelines.

As you may be aware, CSR has been made mandatory, following an amendment to the Companies Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance. Large companies are required to spend 2 per cent of their net profit on CSR activities.

A set of FAQs along with clarifications are provided below for better understanding of the stakeholders.

S. No.	Frequently Asked Questions (FAQs)	Reply
1.	Whether contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure?	Contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013 and it has been further clarified vide Office memorandum F. No. CSR-05/1/2020-CSR-MCA dated 28th March, 2020.
2.	Whether contribution made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’ shall qualify as CSR expenditure?	Chief Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19’ is not included in Schedule VII of the Companies Act, 2013 and therefore any contribution to such funds shall not qualify as admissible CSR expenditure.
3.	Whether contribution made to State Disaster Management Authority shall qualify as CSR expenditure?	Contribution made to State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no (xii) of Schedule VII of the 2013 and clarified vide general circular No. 10/2020 dated 23rd March, 2020.
4.	Whether spending of CSR funds for COVID-19 related activities shall qualify as CSR expenditure?	Ministry vide general circular No. 10/2020 dated 23rd March, 2020 has clarified that spending CSR funds for COVID-19 related activities shall qualify as CSR expenditure. It is further clarified that funds may be spent for various activities related to COVID-19 under items nos. (i) and (xii) of Schedule VII relating to promotion of health care including preventive health care and sanitation, and disaster management. Further, as per general circular No. 21/2014 dated 18.06.2014, items in Schedule VII are broad based and may be interpreted liberally for this purpose.
5.	Whether payment of salary/wages to employees and workers, including contract labour, during the lockdown period can be adjusted against the CSR expenditure of the companies?	Payment of salary/ wages in normal circumstances is a contractual and statutory obligation of the company. Similarly, payment of salary/ wages to employees and workers even during the lockdown period is a moral obligation of the employers, as they have no alternative source of employment or livelihood during this period. Thus, payment of salary/ wages to employees and workers during the lockdown period (including imposition of other social distancing requirements) shall not qualify as admissible CSR expenditure.
6.	Whether payment of wages made to casual /daily wage workers during the lockdown period can be adjusted against the CSR expenditure of the companies?	Payment of wages to temporary or casual or daily wage workers during the lockdown period is part of the moral/ humanitarian/ contractual obligations of the company and is applicable to all companies irrespective of whether they have any legal obligation for CSR contribution under section 135 of the Companies Act 2013. Hence, payment of wages to temporary or casual or daily wage workers during the lockdown period shall not count towards CSR expenditure.
7.	Whether payment of ex-gratia to temporary /casual /daily wage workers shall qualify as CSR expenditure?	If any ex-gratia payment is made to temporary / casual workers/ daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID 19, the same shall be admissible towards CSR expenditure as a onetime exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor

The World Bank defines NGOs as private organisations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development

The World Bank defines NGOs as private organisations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development.

NGOs are legally constituted organisations which operate independently from government and are generally considered to be non-state, non-profit oriented groups who pursue purposes of public interest.

NGOs and Development: History and Role in India
NGOs are voluntary organisations (VOs). These are popularly known as NGOs because they are free from governmental control in their functioning. They are democratic and open to all those wishing to become member of the organisation voluntarily and serve the society.

Therefore, they have assumed a significant space in civil society, which is fast emerging today due to the weakening of the state.

NGO is a popular term, which has gained currency at global level and commands respect in society due to its welfare services in society. The organization does seek financial assistance from the government but it operates, at least theoretically, on its own principles and programmes.

NGOs are, in principle, open to voluntary membership.Any one may become member by choice and resign from the organization at one’s own will.

History of NGOs in India:
NGO have along history in India. In the past, people in this country have been found to have provided help to others in trouble. Since centuries there exists the tradition of voluntary service to the needy and helpless in the country. In the beginning, these services were rendered by people motivated by their religious feelings.

They believed that service to people would be the service to God and, therefore, would be a means to attain spiritual salvation and sometimes to atonement for any sinful act. Spirit of charity and altruism guided the voluntary action in the past, which had found expression in diverse forms even outside the formal established religious channels. Many people including rulers have trod the path of service to their fellow beings and adopted it as their life mission.

Floods, fires, earthquakes, epidemic outbreaks and other kinds of calamities were the occasions which motivated people to voluntary help those who were trapped in disastrous situations. Community life was very strong and people were guided by the ‘we’ feeling and selflessness in extending their individual support.

The help and support used to be individual, spontaneous and transitory.

It is around the late 18th and early 19th century that associations and organisations were being formed to render such activities in a more organised and permanent profile.

The reform movements of the 19th century were perhaps the first organised forms of voluntary action in the service of society. This was the period when the caste rigidities were strong, untouchability was in practice, and other social evils like child marriage, cursed status of widows were prevalent in the Indian society against which voluntary organizations came forward to launch reform movements.

NGOs have gained importance now and are increasing in number very fast. Enhancement of their importance is the result of weakening of the role of state in upholding the welfare and well-being of its citizens and consequent development of the assertive role of civil society to ascertain social welfare and integration. More than half a million voluntary organisations would perhaps be working in the country.

Role of NGOs in development:
NGOs have immense role in bringing about social change and development and it is being experienced from different parts of the country. Development, as we have read earlier, is a multi-faceted process, which essentially involves the aggressive participation of the people that would not be possible unless they are educated, awakened and motivated.

NGOs are taking up this job sportingly and successfully.

The areas in which we witness active and appreciative role of NGOs are as follows:

1. The NGOs are active to promote education, particularly among that section of population, which has remained un-benefited or less benefited by the measures adopted by the government.The education of girls, and other deprived people, particularly the SCs and STs, has been their target objective.
2. Women are the other vulnerable section of society. Gender discrimination is a ubiquitous cultural reality. Girls are discriminated in the upbringing pattern in the family. Larger numbers of the undernourished are from amongst the girls. Retention of girls in schools is much less as compared to boys.
3. Since the second half of the preceding century started the change in the status of women with their active participation in political,social and economic activities, which gained acceleration since the last quarter of the preceding century. Important in this process has been the role of academicians and NGOs.
4. The threat to the human life developed due to environmental pollution and imbalance and the depletion of natural resources as a consequence of the nature of development. Here, the role of NGOs is really noticeable and praiseworthy. Thousands of voluntary organisations are at work to awaken people and governments against environmental degradation and depletion of resources.
5. The NGOs have a major role to play towards the cause of people’s resettlement and are also performing commendable job in this direction. The projects like the construction of dams, road highways and railways have often made some sections of people, particularly in rural areas, vulnerable and are displaced without being properly compensated.
6. NGOs are also rendering great service in restoring dignity to the deprived and discriminated sections of the people in the society like women suffering from gender discrimination, lower caste people suffering from caste segregation and the status of untouchable, racial and religious discrimination.

Tata Trusts’ 2015 move to “surrender” registrations that gave them tax exemptions was “not voluntary”, the Income-Tax Department had told the Bombay High Court in August 2018. The department claimed that the trusts were “forced” to surrender the registrations after an I-T appellate authority

Tata Trusts’ 2015 move to “surrender” registrations that gave them tax exemptions was “not voluntary”, the Income-Tax Department had told the Bombay High Court in August 2018.

The department claimed that the trusts were “forced” to surrender the registrations after an I-T appellate authority order in March 2014 “established” tax violations by them.

The tax department’s submission in the court had come in response to a writ petition filed by one of the trusts, Jamsetji Tata Trust, which had challenged the department’s move to cancel the registrations, claiming that they had themselves surrendered the registrations in 2015.

Justifying its move to seek cancellation of registrations, the tax body had told the court that Tata Trusts “were left with no other option” but to surrender following the appellate authority’s ruling over various violations for the 2010-11 assessment year. ET has seen the department’s 2018 response, which has not come in the public domain so far.

In October 2019, the tax department cancelled registrations of six Tata Trusts — Jamsetji Tata Trust, RD Tata Trust, Tata Education Trust, Tata Social Welfare Trust, Sarvajanik Seva Trust and Navajbai Ratan Tata Trust.

Tata Trusts in a statement at the time said the cancellation order was “a culmination of the decision taken by these six trusts in 2015 to surrender, of their own volition, their registration under the I-T Act and to not claim the associated tax exemptions.” Tata Trusts had withdrawn the writ petition in the high court a year earlier, in October 2018.

The Income Tax Appellate Tribunal (ITAT) order, referred to by the I-T department in its response to the court, was passed on March 23, 2014. The department’s affidavit, filed by principal commissioner of income tax, Mumbai, Lekha Kumar, claimed that Jamsetji Tata Trust “itself agreed that decision to given up benefits was based on ITAT’s decision” in its case. “So, the surrender is not voluntary,” it said.

The government is considering a high-level committee’s recommendation on tax deduction on CSR funding and making non-compliance with CSR norms a civil offence, a senior Ministry of Corporate affairs (MCA) official said. The committee chaired by Corporate Affairs Ministry Secretary

The government is considering a high-level committee’s recommendation on tax deduction on CSR funding and making non-compliance with CSR norms a civil offence, a senior Ministry of Corporate affairs (MCA) official said.

The committee chaired by Corporate Affairs Ministry Secretary Injeti Srinivas in its report submitted on August 2019 has recommended that in case of violation of CSR provisions, penalty may be imposed instead of imprisonment.

In respect of tax benefit for CSR activities, the committee has recommended that all activities listed under Scheduled VII of the Companies Act, 2013 to enjoy uniform tax benefit and CSR expenditure to be made deductible from the income earned for the purpose of taxation.

“The Ministry of Corporate Affairs is considering these recommendations for implementation,” the official said.

During the monsoon session of Parliament, Minister of State for Finance and Corporate Affairs Ministry Anurag Singh Thakur had informed that the government was looking into the committee’s recommendations.

The committee has also suggested a provision to carry forward unspent CSR balance for three to five years.

According to the new CSR norms under Section 135 of the Companies Act, a company has to earmark a part of its profit for social activities and transfer all unspent amount to an escrow account if it is an ongoing project.

This account will be opened by the company concerned in a bank and be called the unspent corporate social responsibility account.

The CSR expenditure which remains unspent in three years would be transferred to any fund specified in Schedule VII of the Companies Act such as the Swachch Bharat Kosh, the Clean Ganga Fund, and the Prime Minister’s Relief Fund.

The central government funds should be discontinued as CSR spend, the committee report said and instead a special designated fund should be created for transfer of unspent CSR money beyond three to five years.

The committee has recommended that Schedule VII be aligned with the sustainable development goals to include sports promotion, senior citizens’ welfare, welfare of differently abled persons, disaster management, and heritage protection.

According to the government data, of the total 21,337 companies liable for CSR 9,753 companies did not report CSR activity in 2017-18.

The other recommendations of the committee include developing a CSR exchange portal to connect contributors, beneficiaries and agencies, allowing CSR in social benefit bonds and promoting social impact companies.

The committee constituted in October, 2018 has among its members N Chandrasekaran, chairman, Tata Sons, and Amit Chandra, managing director, Bain Capital Private Equity, among others.

The government on Tuesday informed Parliament that it has so far given permission to prosecute in 366 cases related to CSR related offences. “So far, sanction for prosecution has been accorded in 366 cases. All CSR related offences are compoundable

The government on Tuesday informed Parliament that it has so far given permission to prosecute in 366 cases related to CSR related offences.

“So far, sanction for prosecution has been accorded in 366 cases. All CSR related offences are compoundable. So far, 118 applications for compounding have been made and 37 cases have been compounded,” Minister of State for Finance and Corporate Affairs Anurag Singh Thakur said in a written reply to the Rajya Sabha on December 10.

Whenever any violation of the CSR provisions is reported, action against such non-compliant companies are initiated as per provisions of Companies Act, 2013 after due examination of records, he added.

The Minister further said that there was no proposal under consideration to incentivise companies for CSR investment in areas like education and health care.

He was responding to queries raised by JD(U) member M P Veerendra Kumar who had also asked if the government has constituted a monitoring committee to oversee the CSR spending of the companies.

The Minister said the CSR is a Board driven process and the Board of the company is empowered to decide the activities to be undertaken as per Schedule VII of the Companies Act, 2013 taking into consideration the recommendation of its CSR committee.

The entire CSR architecture is disclosure based and CSR mandated companies are required to file details of CSR amount spent annually in MCA21 registry, he added.

Chief Justice of India (CJI) Ranjan Gogoi wants Corporate Social Responsibility (CSR) integrated into a modern business strategy to achieve the goal of social justice. This practice will ensure that financial drivers and sustainable development metrics are embedded in mainstream businesses

Chief Justice of India (CJI) Ranjan Gogoi wants Corporate Social Responsibility (CSR) integrated into a modern business strategy to achieve the goal of social justice. This practice will ensure that financial drivers and sustainable development metrics are embedded in mainstream businesses.

“To achieve the goal of social justice in the best possible manner, CSR must be integrated into our modern business strategy,” Gogoi said while speaking at an Associated Chambers of Commerce of India (ASSOCHAM) event. He said India is a developing country and although the country’s economy began to thrive post-privatization and globalization, the situation is different from that of the developed west. “Having entered the global marketplace without a particularly robust regulatory infrastructure and fully functional state services like schools, highways, or hospitals, we have experienced and continue to experience great inequities,” Gogoi feels.

Therefore, it requires the companies and businesses to act beyond their legal obligations to integrate social, environmental and ethical concerns into a company’s business process, he added. Gogoi also observed that one of the areas of greatest weakness concerning social protection relates to the extremely limited attention within the CSR agenda to the vast majority of workers, producers and enterprises in the country that are associated with micro and small enterprises, small-scale agriculture and the so-called informal sector’.

In India, corporates have been engaging themselves in philanthropy and charitable activities while embedding the same in law has given a new dimension to the CSR. Sharing CJI’s views, ASSOCHAM Senior Vice President Niranjan Hiranandani said the CSR should go well beyond the legal obligation and it should become part of an enterprise, starting from the top management.

A crucial legislation for ensuring equal rights to persons affected by HIV and AIDS in getting treatment, admission in educational institutions and jobs has come into force. The Ministry of Health has announced the implementation of the Human Immunodeficiency Virus (HIV)

A crucial legislation for ensuring equal rights to persons affected by HIV and AIDS in getting treatment, admission in educational institutions and jobs has come into force.

The Ministry of Health has announced the implementation of the Human Immunodeficiency Virus (HIV) and Acquired Immune Deficiency Syndrome (AIDS) Act through a gazette notification has been issued.

The Act, which received Presidential assent on April 20 last year, prohibits discrimination against such persons in accessing healthcare, getting jobs, renting accommodation, and in admission to public and private educational institutions.

The moves come after the Delhi High Court asked the Centre why it has not yet notified the law to prevent discrimination against HIV and AIDS patients despite the statute receiving Presidential assent in April last year.

Hearing a PIL that sought immediate notification of the legislation, a bench of Chief Justice Rajendra Menon and Justice C Hari Shankar had asked the health ministry, “You make a law and are not notifying it. Why?”. The matter was listed for hearing on November 26.

“In exercise of the powers conferred by sub-section 3 of section 1 of the Human Immunodeficiency Virus (HIV) and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017, the Central Government hereby appoints the 10th day of September, 2018, as the date on which the provisions of the said Act shall come into force,” the notification read.

According to the provisions of the Act, no HIV test, medical treatment or research will be conducted on a person without his informed consent and no person shall be compelled to disclose his HIV status for obtaining employment or services, except with his informed consent, and if required by a court order.

The legislation has provisions to safeguard the property rights of HIV positive people, he said, adding that every HIV infected or affected person below the age of 18 years has the right to reside in a shared household and enjoy the facilities of the household.

The act also prohibits any individual from publishing information or advocating feelings of hatred against HIV positive persons and those living with them.

As you may be aware, CSR has been made mandatory, following an amendment to the Companies Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance

As you may be aware, CSR has been made mandatory, following an amendment to the Companies Act, 2013 in April 2014.

Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance.

Large companies are required to spend 2 per cent of their net profit on CSR activities.

A set of FAQs along with clarifications are provided below for better understanding of the stakeholders.

1. What is meaning of ‘any financial year’ mentioned in Section 135 (1) of the Companies Act, 2013?
   “Any Financial year” referred under Sub- Section (1) of Section 135 of the Act read with Rule 3(2) of Companies CSR Rule, 2014 implies any of the three preceding financial years ( may refer General Circular No. 21/2014, dated: 18.06.2014)
2. Compliance under section 135 of the Act i.e. Corporate Social Responsibility, is applicable from which Financial Year?
   

   The compliance of the provisions of CSR under the Companies Act, 2013 i.e. constitution of CSR Committee, formulation of CSR Policy, the spending of requisite amount on CSR activities came into force from April, 2014.

3. Whether expenditure by Companies on activities covered under Schedule VII for the fulfillment of any Act/Statute of Regulations will count as CSR expenditure?
   

   This would not count as CSR expenditure. (may refer point no. (iii) of General Circular No. 21/2014, dated: 18.06.2014)

4. Can the expenditure incurred towards personnel exclusively appointed by the companies for implementing the CSR activities of the company, be included in the expenditure earmarked for CSR activities?
   

   Salary paid by the companies to regular CSR staff as well as employees, who render their services for CSR will be part of Administrative overheads and should not exceed 5% of the total CSR expenditure as per rule 4(6) of CSR Policy, Rules 2014.

5. Whether CSR expenditure of a company can be claimed as a business expenditure?
   

   The amount spent by a company towards CSR cannot be claimed as business expenditure. The Finance Act, 2014 provides that any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession.

6. Whether the ‘average net profit’ criteria for section 135(5) is Net profit before tax or Net profit after tax?
   

   Computation of net profit for section 135 is as per section 198 of the Companies Act, 2013 which primarily is NET PROFIT BEFORE TAX.

7. Can the CSR expenditure be spent on the activities beyond Schedule VII?
   

   General Circular No. 21/2014 dated June18, 2014 of MCA has clarified that the statutory provision and provisions of CSR Rules, 2014, is to ensure that while activities undertaken in pursuance of the CSR policy must be relatable to Schedule VII of the Companies Act 2013. However, the entries in the said Schedule VII must be interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule. The items enlisted in the Schedule VII of the Act, are broad-based and are intended to cover a wide range of activities.

8. What tax benefits can be availed under CSR?
   

   No specific tax exemptions have been extended to CSR expenditure per se. Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. While no specific tax exemption has been extended to expenditure incurred on CSR, spending on several activities like contributions to Prime Minister’s Relief Fund, scientific research, rural development projects, skill development projects, agricultural extension projects, etc., which find place in Schedule VII, already enjoy exemptions under different sections of the Income Tax Act, 1961.

9. Which activities would not qualify as CSR Expenditure?
   • The CSR projects or programs or activities that benefit only the employees of the company and their families shall not be considered as CSR activities in accordance with section 135 of the Act.
   • One-off events such as marathons/ awards/ charitable contribution/ advertisement/sponsorships of TV programmes etc. would not be qualified as part of CSR expenditure.
   • Expenses incurred by companies for the fulfillment of any Act/ Statute of regulations (such as Labour Laws, Land Acquisition Act etc.) would not count as CSR expenditure under the Companies Act.
   • Contribution of any amount directly or indirectly to any political party shall not be considered as a CSR activity.
   • Activities undertaken by the company in pursuance of its normal course of business.
10. Will being a holding or subsidiary company of a company which fulfils the criteria under section 135(1) make the company liable to comply with section 135, even if the company itself fulfills the criteria
    

    Being a holding or subsidiary company of a company which fulfils the criteria under section 135(1) doesn’t make the company liable to comply with section 135, unless the company itself fulfills the criteria.

11. Whether provisions of CSR are applicable on Section 8 Company, if it fulfills the criteria of section 135(1) of the Act.
    

    Section 135 of the Act reads “ Every company…….”, i.e no specific exemption given to section 8 companies with regard to applicability of section 135, hence section 8 companies are required to follow CSR provisions.

12. Can donation of money to a trust by a company be treated as CSR expenditure of the company?

    General Circular No. 21/2014 of MCA dated June 18, 2014 clarifies that Contribution to Corpus of a Trust/ Society/ Section 8 companies etc. will qualify as CSR expenditure as long as:

    1. the Trust/ Society/ Section 8 company etc. is created exclusively for undertaking CSR activities or
    2. where the corpus is created exclusively for a purpose directly relatable to a subject covered in Schedule VII of the Act
13. There is no need to prepare director’s report for Foreign company so whether it is mandatory for foreign Company also to give reporting of CSR activity
    

    In case of a foreign company, the balance sheet filed under sub-clause (b) of sub-section (1) of section 381 shall contain an Annexure regarding report on CSR.

14. Whether contribution to political party is considered as CSR activity?
    

    Contribution of any amount directly or indirectly to any political party under section 182 of the Act, shall not be considered as CSR activity. (May refer Rule 4(7) of CSR Policy, Rules 2014).

15. Whether CSR projects or programmes for employee of the Company and their family will form part of CSR activity?
    

    NO, The CSR projects or programs or activities that benefit only the employees of the company and their Families shall not be considered as CSR activities in accordance with section 135 of the Act’. (May refer Rule 4(5) of CSR Policy, Rules 2014).

16. Whether expenditure incurred on disaster relief qualifies for CSR or not?

    Disaster relief can cover wide range of activities that can be appropriately shown under various items listed in Schedule VII. For example,

    1. medical aid can be covered under ‘promoting health care including preventive health care.’
    2. food supply can be covered under eradicating hunger, poverty and malnutrition.
    3. supply of clean water can be covered under ‘sanitation and making available safe drinking water’. (May refer to annexure to General Circular dated 18.06.2014)
17. Whether contribution in kind is permissible as CSR or not?
    

    Section 135 prescribes “….shall ensure that company spends….”.The company has to spend the amount.