TMI BlogFrequently Asked Questions (FAQs) with regard to Corporate Social Responsibility under section 135 of the Companies Act, 2013X X X X Extracts X X X X X X X X Extracts X X X X ..... appraise and approve their CSR policy including CSR projects or programmes or activities to be undertaken. In this connection, Ministry has been receiving several queries and references seeking further clarifications on various issues relating to CSR provision of the Act . 2. In continuation to this Ministry's General Circular dated 18 th June, 2014 and 17 th September, 2014 , a set of FAQs along with response of the Ministry is provided*for facilitating effective implementation of CSR : FREQUENTLY ASKED QUESTIONS ON CORPORATE SOCIAL RESPOSIBITITIES SI. NO. FAQS 1. WHETHER CSR PROVISION OF THE COMPANIES ACT, 2013 IS APPLICABLE TO ALL COMPANIES? CSR provisions of the Companies Act 2013 is applicable to every company registered under the Companies Act 2013 and any other previous companies law having Net worth of rupees five hundred crore or more, or Turnover of rupees one thousand crore or more or A net profit of rupees five crore or more during any financial year 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 . 7. WHICH ACTIVITIES WOULD NOT QUALIFY AS CSR? The CSR projects or programs or activities that benefit only the employees of the company and their families. One- off events such as marathons/ awards/ charitable contribution/ advertisement/ sponsorships of TV programmes etc. Expenses incurred by companies for the fulfilment of any other Act/ Statue of regulations (such as Labour Laws, Land Acquisition Act, 2013, Apprentice Act, 2013, Apprentice Act, 1961 etc.) Contribution of any amount directly or indirectly to any political party. Activities undertaken by the company in pursuance of its normal course of business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il, 2014 shall include an annual report on CSR containing particulars specified in Annexure. (refer Rule 9 of CSR policy, Rules 2014 ). 13. WHETHER IT IS MANDATORY FOR FOREIGN COMPANY TO GIVE REPORT ON 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 TOWARDS DISASTER RELIEF QUALIFIES AS CSR OR NOT? (May please refer point no. 7 to the annexure to General Circular dated 18.06.2014 issued by Ministry of Corporate Affairs). 15. WHETHER CONTRIBUTION IN KIND CAN BE MONETIZED TO BE SHOWN AS CSR EXPENDITURE? Section 135 prescribes .. shall ensure that company spends .. . The company has to spend the amount. 16. IF A COMPANY SPENDS IN EXCESS OF 2% OF ITS AVERAGE NET PROFITS OF THREE PRECEDING YEARS ON CSR IN A PARTICULAR YEAR, CAN THE EXCESS AMOUNT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to involve the corporates in discharging their social responsibility with their innovative ideas and management skills and with greater efficiency and better outcomes. Therefore, CSR should not be interpreted as a source of financing the resource gaps in Government Scheme. Use of Corporate innovations and management skills in the delivery of public goods is at the core of CSR implementation by the companies. In- principle, CSR fund of companies should not be used as a source of funding Government Schemes. CSR projects should have a larger multiplier effect than that under the Government Schemes. However, under CSR provision of the Act and rules made thereunder, the Board of the eligible company is competent to take decision on supplementing any Government Scheme provided the Scheme permits corporates participation and all provisions of Section 135 of the Act and rules thereunder are compiled by the company. 21. WHO IS THE APPROPRIATE AUTHORITY FOR APPROVING AND IMPLEMENTATION OF THE CSR PROGRAMMES/PROJECTS OF A COMPANY? WHAT IS GOVERNMENT S ROLE IN THIS REGARD? Government has no role to pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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