Should CSR spend get tax rebate?

No matter how loud and impactful the ‘responsibility’
buzz is among Indian corporate houses, the corporate affairs ministry does not
seem to be overly concerned or at least does not seem to be lenient towards even the
more responsible ones.

In an Assocham release, R Bandyopadhyay, secretary in the
ministry of corporate affairs, quoted that India Inc may not get any tax sop
for spending on their corporate social responsibility (CSR) initiatives. In a
few months, this will be made amply clear to all corporates when the ministry
reviews existing corporate governance guidelines.

The secretary’s statement, however, does not justify corporate
affairs minister Salman Khurshid’s announcement that companies may be provided
‘fiscal incentives’ for their greater participation in CSR-related work.

Bandyopadhyay said his ministry would like corporates to
adopt CSR as a part of their corporate culture, and that such a culture could
not be developed with the reward of incentives.

‘The government will monitor the CSR initiatives of the
industry, which has to voluntarily adopt CSR, for a year,’ said Bandyopadhyay.
He added that in case companies failed to take voluntary initiatives, the
government in consultation with the Planning Commission will consider making
CSR spending a ‘mandatory exercise’.

The review of existing CSR guidelines will happen in
consultation with all concerned. The ministry will invite suggestions and
criticism in the new guidelines, likely to be unveiled in the next few months, said
Bandyopadhyay. He, however, said that the guidelines will not be harsher
and the government will do its best to make them enlightened to ensure their
wider acceptance by the industry.

Planning Commission member Arun Maira said industry
associations like Assocham ought to discipline its member and constituents for
adoption of CSR initiatives as intended by the government. The industry
associations should thereafter suspend the membership of their members in case
they fail to implement the CSR guidelines as desired and directed by the government,
Maira added.