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Corporate Social Responsibility links Corporate Sector to Social Sector.It is becoming more relevant in our society plagued by increasing inequalities between haves and havenots. Corporate Social Responsibility means that the corporate sector, which earns profit through the sale of its goods and services in the society also has some responsibility towards it. This is essential to promote growth with equity and to achieve an inclusive society. The income is earned from the society and therefore it should be given back.

Mandatory provisions
• Under Companies Act, 2013 any company with a net worth of the company to be Rs 500 crore or more or turnover of the company to be Rs 1000 crore or more or net profit of the company to be Rs 5 crore or more.
• has to spend at least 2% of last 3 years average net profits on CSR activities as specified in Schedule VII and as amended from time to time. The rules came into effect from 1 April 2014.
• India is the first country in the world to enshrine corporate giving into law. The provisions of CSR are not only applicable to Indian companies, but also applicable to offices of a foreign company in India. The qualifying company will be required to constitute a CSR Committee consisting of 3 or more directors.

CSR Activities
Activities relating to:—
(i) eradicating hunger, poverty and malnutrition,
(ii) promoting health care including preventive health care and sanitation and making available safe drinking water;
(iii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
(iv) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
(v) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal, welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water;
(vi) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;
(vii) measures for the benefit of armed forces veterans, war widows and their dependents;
(viii) training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports;
(ix) contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
(x) contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
(xi) rural development projects.
(xii) slum area development.


Non-compliance
A survey found that 52 of the country’s largest 100 companies failed to spend the required 2% last year. Corporate is really not spending on CSR as much as they should as 28% growth indicates against 41% by PSUs. Some companies were alleged to cheat by giving donations to charitable foundations that then return the fund minus a commission. One of the challenges for the corporate sector is finding credible charity partners to support. A lot of companies find it better to do the CSR in a passive way as it saves their time and human resources. So the bigger charities that are more well-known are being flooded with money leaving out smaller charities.

Amongst CSR activities, Education and health continues to be favourite sectors. Prime Minister’s National Relief Fund along with other funds set up by the Central and the state governments has been the biggest gainer with a jump of 418%.

Penalty for non-compliance of CSR provisions under Companies Act, 2013
No specific penal provision for non-compliance . Penalties can be levied under two (2) different provisions. If the company did not spend CSR, it has to disclose the reason for not spending. Non-disclosure or absence of the details will be penalised from Rs 50,000 to Rs 25 lakhs or even imprisonment of up to 3 years.