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The companies that fall under the CSR ambit will have to appoint a CSR committee consisting of
at least three members including one Independent Director. The CSR committee would be
responsible to formulate CSR policy, recommend CSR initiatives and monitor CSR expenditure.
The Board members of the company will have to approve the CSR Policy drafted by the CSR
Committee. With respect to a foreign company covered under these rules, the CSR Committee
shall comprise of at least two persons of which one person shall be as specified under clause (d)
of sub-section (1) of section 380 of the Act and another person shall be nominated by the foreign
company. The Board would be mandated to report on CSR in the Annual Board report. In case of
failure to spend the prescribed amount, reasons would have to be disclosed in the report.
The CSR policy of a company will include a list of CSR projects or programs which a company
plans to undertake falling within the purview of the Schedule VII of the Act, specifying
modalities of execution of such project or programs and implementation schedules for the same.
fiinovation
A company which is mandated to spend on CSR as per section 135 of the act fails to do so shall
explain the reason for its inability to do so in any year. A failure to do so will attract a fine of not
less than Rs. 50,000 and not more than Rs. 25,00,000. The default officer will attract
imprisonment for a term which may extend to three years or with fine which shall not be less
than Rs. 50,000 and not more than Rs 5,00,000, or with both.
The companies can claim tax deductions for their CSR activities. The Finance Minister has
clarified that deductions specifically allowed under Sections 30 to 36 of the Income Tax (IT)
Act, 1961 could be availed. Section 30 of the IT Act can be used for availing deductions against
expenditure incurred on repairs and insurance in respect of machinery, plant and furniture used
for CSR activities. Rent, rates, taxes and repairs incurred on buildings or other assets taken on
lease earmarked for CSR activity would also qualify for deductions. Companies can also claim
deduction towards depreciation on assets used for CSR purposes.
Schedule VII
The Schedule VII lists the number of activities that can be considered as CSR activity.
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