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The new disclosure framework for CSR spending by companies will help gather granular details for analytical purposes and also bring greater transparency with respect to expenditure, according to a senior government official.
The Corporate Social Responsibility (CSR) regime, applicable for certain class of profitable companies, came into force in April 2014 and official data available up to September 30, 2021, showed that an amount of Rs 8,828.11 crore was spent towards such works in the last financial year.
According to the National CSR data portal, maintained by the corporate affairs ministry, the amount spent in 2020-21 fiscal is Rs 20,360 crore. However, the figure is likely to be higher as corporates have time till March to submit their filings related to CSR.
During the period from 2014-15 to 2020-21, companies spent around Rs 1.09 lakh crore towards CSR activities, including those related to health, education, poverty eradication, women empowerment and rural development.
In 2019-20 financial year, the CSR expenditure stood at Rs 24,864 crore. As per data available on the portal, the total CSR spending in the last two financial years is more than Rs 45,200 crore.
Earlier this month, the ministry notified Form CSR-2 (Report on Corporate Social Responsibility).
The form requires companies concerned to provide details about the CSR amount spent against ongoing projects as well as those other than ongoing projects.
Other requirements include furnishing of details of amount spent on impact assessment and whether any capital assets have been created or acquired through CSR spent in a given financial year.
The official said the idea behind the introduction of the form is to capture granular details about the CSR spending that is required for analytical purposes, adding that it will also help stakeholders to know what companies are doing with their CSR obligations.
The form will be in a machine readable format and the data will also be made available on the CSR portal.
Regarding the form, concerns have been expressed in certain quarters that the new disclosure requirements could increase the compliance burden for companies.
The official noted that the new disclosure requirements are aimed at “bringing greater transparency” in the activities of companies so far as CSR is concerned so that the ecosystem gets strengthened.
Under the Companies Act, 2013, certain class of profitable entities are required to shell out at least 2 per cent of their three-year annual average net profit towards CSR activities in a particular financial year.
Last December, the ministry informed Parliament that since the enactment of CSR provisions with effect from April 2014, companies are responding positively and have shown encouraging signs in adopting the culture of being responsible towards society.
In 2021, the ministry made non-compliance with CSR provisions a civil wrong.
CSR framework is a process driven by the board of a company which is empowered to plan, decide, execute and monitor CSR activities.
Companies having a net worth of at least Rs 500 crore or a minimum turnover of Rs 1,000 crore or net profit of Rs 5 crore or more during the immediately preceding financial year have to spend on CSR activities.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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