CB Bureau
As Companies Bill, mandating spending
towards CSR, received the President’s assent, Corporate Affairs Minister Sachin Pilot urged companies to desist from
spending on profit-making activities under the CSR guise.
Pilot in a statement said that the ministry was open to discussing and taking forward the idea of
the companies getting some tax benefits for corporate social responsibility (CSR)
spending, but only if the companies shared
the ‘letter and spirit’ of the new requirement and did not tweak the contents of
the bill to initiate profit-making businesses.
Speaking to a news agency, Pilot stated that the intent of
the CSR clause was to bring ‘smiles’ on the faces of people and not profits in
the coffers of the companies.
‘CSR should be viewed as something
that you are doing – whether through cash or kind, or man hours, or anything
else – to bring smiles to the people’s faces and not for your EBITDA (earnings
before interest, taxes, depreciation and amortisation),’ Pilot said.
‘…Let the final call be taken by the
CSR committee on the board of each of these companies and let them disclose to
the world that this is what we are doing as CSR,’ Pilot emphasized.
The industry is waiting for new rules for the legislation to take effect. The ministry in its
statement on Friday said that it was in the process of making the rules and would
most likely be ready with them in another two weeks. After the rules are
announced, the stakeholders and general public will get up to 60 days to
provide their comments on the same.
Most companies that are already spending a considerable sum towards CSR have sought to know whether the money spent on
education, healthcare and other welfare-related ventures of group entities
would qualify for the mandatory CSR spending.
While finer details
will emerge after the specific rules for various clauses of the new Companies
Bill are formulated, the CSR norms will be applicable to companies having
net worth of Rs 500 crore or more; turnover of Rs 1,000 crore or more;
or net profit of Rs 5 crore or more.
CauseBecause has started a series of articles for better
understanding of Section 135. These can be read here: