Under the Companies Act, 2013, firms having a net worth of at least Rs 500 crore are required to make CSR spend
NEW DELHI: Corporate Affairs Ministry has sought tax benefits for social welfare spending which is compulsory for certain class of profitable entities under the new companies law.
Industry has been seeking tax benefits on spending towards Corporate Social Responsibility (CSR) activities.
Sources said the Corporate Affairs Ministry has written to the Finance Ministry seeking tax benefits for CSR spending by companies.
The Corporate Affairs Ministry, which is also in the process of finalising CSR rules, is awaiting response on the tax benefits issue from the Central Board of Direct Taxes (CBDT), they added.
Considered the first of its kind, the new Companies Act requires certain class of entities to shell out at least two per cent of their three-year average annual net profit towards CSR work.
Going by estimates, the total spending on such activities is estimated to be around Rs 15,000 to 20,000 crore annually.
Under the Companies Act, 2013, firms having a net worth of at least Rs 500 crore or a minimum turnover of Rs 1,000 crore or a net profit of Rs 5 crore are required to make CSR spend.
Such eligible companies should set up a CSR committee that has at least three directors including an independent director.
Those companies, which fail to spend the requisite money, should disclose the reasons for the same.
In case of a failure to make necessary disclosures on CSR expenditure, it would be considered as a “serious offence”, Corporate Affairs Minister Sachin Pilot had said recently.
The Minister has always maintained that government would not want to be the judge and jury on how to spend the CSR money.
According to him, CSR rules are exhaustive and efforts have been made to include as many areas as possible.
Besides, a provision has been made under which any activity deemed as CSR by the board of the concerned company would qualify for the same, provided a disclosure is made.
Rules for the new companies law are being finalised after extensive consultations with various stakeholders.
(PTI, 5 January 2014)