Cos to spend Rs 20k cr a year on CSR: Pilot

Cos to spend Rs 20k cr  a year on CSR: Pilot

Expecting an annual CSR spending up to Rs 20,000 crore, the Corporate Affairs Minister Sachin Pilot has asked companies to look at the new law as an...

New Delhi (PTI): Expecting an annual CSR spending up to Rs 20,000 crore, the Corporate Affairs Minister Sachin Pilot has asked companies to look at the new law as an investment opportunity to create better work environment, rather than a forced expenditure.

The minister said the canvas is wide open for the companies to decide on CSR (Corporate Social Responsibility) activities they wish to undertake as per the new norms. The few areas prescribed under the law are only suggestive and it should not be considered as restrictive list, he added.

Under the new Act, 2013, which has replaces six-decade old legislation, all profitable companies with a sizeable business would have to spend every year at least two per cent of three-year average profit on CSR activities. It is mandated for those companies with a turnover of Rs 1,000 crore and more, or net worth of Rs 500 crore and more, or a net profit of Rs 5 crore and more. The new rules, applicable from the next fiscal, require the companies to set up a CSR committee of their board members, including at least one independent director. "This money would not come to government. The companies can spend as per the decision taken by the CSR committee of their board. But they must report the same," Pilot said.
"Our assessment is that if every company that is qualified for doing the CSR does so, then Rs. 15,000-20,000 crore would be spent in a year on various projects such as environment, skill development, water, sanitation etc" Pilot said.
Companies can give their preference of local area of operation, and if they fail to spend the money earmarked for the purpose, they have to specify the reasons in the report. Interestingly, the CSR is not looked as a ‘charity or donation’, and it is not been used exclusively for the benefit of the company employees or their family members. The activity must be undertaken within the country. The companies have to create a CSR corpus and income from the activity, if any, should be re-deposited in the account.
As per industry estimates, the mandatory norms are expected to apply to about 10,000 companies. The CSR committees of the respective boards of the companies would need to prepare a CSR policy, specifying the projects and programmes to be undertaken and modes of execution schedules. While the companies can collaborate or pool resources with others to undertake their CSR activities jointly and any expenditure incurred on such collaborative efforts would qualify for computing the CSR spending.
The government has also proposed to allow the companies to set up trusts or other separate non-profit entities to facilitate implementation of their CSR activities. Besides, CSR programmes can also be undertaken by the company through non-related trusts, societies, or other non-profit companies with an established track record of at least three years.
Activities which may be included by the companies in their CSR programme can be related to "eradicating extreme hunger and poverty, promotion of education, promoting gender equality and empowering women, and reducing child mortality and improving maternal health".
Other such activities can include combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases; ensuring environmental sustainability, employment enhancing vocational skills and social business projects. The permitted CSR would also include contributions to the Prime Minister's National Relief Fund or any other government fund for socio-economic development and relief, and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women.
Pilot said that the draft rules have been framed keeping in mind the main legislation and the government would incorporate the public suggestions as much as possible. Expecting full cooperation from the corporate sector on the CSR rules, the Minister said: "It is one thing to sponsor events like cricket matches and get some benefits out of the same. But CSR should be about creating goodwill.

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