NEW DELHI: The Finance Ministry is expected to take a view on providing tax benefits for expenditure on social welfare activities by companies after the Budget, Corporate Affairs Minister Sachin Pilot has said.
Against the backdrop of the government making Corporate Social Responsibility (CSR ) spending mandatory in the proposed new Companies Act, various firms are pitching for tax benefits on such expenditure.
Emphasising that money spent on CSR does not go to the government coffers, Pilot said the money should be invested for community development.
“It is clear that CSR (spending) we have proposed in the (Companies) Bill is two per cent of the profits.
“Now, I think, post Budget, the Finance Ministry will take a view (on whether) it will be taken as an expense or not. But for all purposes, the definition of profit is what it is… Different people have approached, different suggestions have come forward,” Pilot told reporters.
He was responding to a query on whether his ministry has taken up the issue of tax benefits for CSR activities with the finance ministry, on the sidelines of the 63rd annual function of the Institute of Chartered Accountants of India (ICAI).
The new Companies Bill proposes that certain companies would need to spend two per cent of profits on CSR activities, unless they have a reasonable reason for not doing so.
“It is important to understand that this money is not something that goes into the coffers of the government. In fact, we want the to keep the government out of it.
“We want self-compliance, self-regulation and self-disclosures that companies should do. They must invest that money for community development and develop the communities where they work,” Pilot said.
Stressing that CSR money is that of companies, he said it must be ploughed back into developing the society. “… it has been happening before.. We are trying to give it a structure, framework,” he added.