Amendment to the companies bill to decriminalized several sections including those for corporate social responsibility (CSR) has been a welcome step for India Inc.
On Saturday, the Lok Sabha passed the bill which will offer much needed relief to the companies, who were already reeling under the compliance stress following the COVID-19 pandemic.
In her reply, the Finance Minister said that the amendment in the tax related laws is brought about only to provide relief to taxpayers, so that statutory compliances can be met amidst the COVID-19 pandemic.
Speaking about the PMCARES fund, the Finance Minister explained its difference from the Prime Minister’s National Relief Fund (PMNRF) by chalking out a comparative analysis. She said, PMCARES is a registered public trust whereas PMNRF has not been registered till date since its inception in 1948.
PMNRF fund which also has been given tax deduction benefit does not come under the purview of RTI. Both relief funds are eligible for receiving the benefits under Corporate Social Responsibility (CSR) compliance.
Commenting on the amendment, Makarand Joshi, partner, MMJC and Associates LLP – a corporate compliance firm said, “Non-spending of earmarked funds for CSR are no more a criminal offence, but new amendment has empowered ROC to levy a penalty up to twice the unspent amount through adjudication process. In other words, the penalty can be levied by ROC itself without going through the court process. Between 2014-2018 an estimated Rs 25,000 crore remained unutilized, as per a high-level committee report constituted by the government on CSR and this amount could go up to as much as Rs 35000-40,000 crore if the years between 2018-20 are included.”
