Corporate Social Responsibility-post amendment & in Covid 19
KAMAL NATH THAKUR
2020-07-18 18:31:24
Corporate Social Responsibility(CSR)-post amendment & in Pandemic scenario.
CSR can be defined as a Company’s sense of responsibility towards the community and
environment, both ecological and social in which it operates.
CSR is not charity or mere donations. CSR is a way of conducting business, by which corporate
entities visibly contribute to the social good.
On 31 July 2019, the Companies (Amendment) Act 2019 (Amendment) received the assent of the President of India. The Amendment also retains the ‘crackdown’ provisions on black money and
shell companies. The new crackdown provision is the revisions to the existing framework of
Corporate Social Responsibility (CSR). The CSR regime is now no longer “comply or explain”
but “comply or imprisonment”.
Erstwhile CSR requirements under Section 135: Under the erstwhile framework, all companies
having net worth of INR 500 Crore or more, or turnover of INR 1000 Crore or more, or net profit of INR 5 Crore or more during any financial year, are required to constitute a CSR committee.
Such companies were required to develop a dedicated CSR policy (giving preference to local
areas where the company operates) and establish a CSR fund equivalent to 2 percent of the
average net profits made by the company in 3 (three) immediately preceding financial years.
Under the Companies Act 2013 (Companies Act), if the company failed to meet its CSR
obligations, the reasons for not spending the CSR amounts were required to be disclosed
If there are any unspent CSR funds during a financial year (in respect of an ongoing CSR
Project), in accordance with its CSR policy, the company must transfer such unspent CSR funds
into a special account within a period of 30 (thirty) days from the end of the financial year. Such
account, to be opened with a scheduled bank by the company, will be called an Unspent
Corporate Social Responsibility Account (Unspent CSR Account) and the proceeds of the
Unspent CSR Account will have to be spent by the company towards the CSR projects (under
its CSR policy) within 3 (three) financial years from the date of such transfer. If the company is
unable to spend the sum in the Unspent CSR Account within the prescribed period of 3 (three)
financial years, then, such unspent amount should be transferred to a fund specified under
Schedule VII of the Companies Act (Schedule VII Fund) within 6 (six) months from the end of
the relevant financial year.
Considering the spread of novel Coronavirus (COVID-19) in India, the Ministry of Corporate
Affairs (MCA) has announced that spending of CSR Funds for COVID-19 is an eligible CSR
activity of a company. The Government clarified that the funds spent on measures to tackle the
Covid-19 outbreak would be considered as the corporate social responsibility (CSR) activity of
firms.
Eligible CSR Expenditure Related to COVID-19 Activities are:-
1.Contribution to PM CARE Fund
2.Contribution to the State Disaster Management Authority.
3.Spending of CSR fund for Covid-19.
Ineligible spending on CSR are:-
1.Contribution to CM’s/ state relief fund.
2.Payment of wages to employees.
3.Payment to casual workers during the lockdown period.
KAMAL NATH THAKUR
DGM-FINANCE
NTPC Ltd.
SSC-DBF& HYDRO.