Consider CSR spends as investment, not tax: Pilot

Responding to the mixed reactions of the industry on mandatory
spends towards corporate social responsibility (CSR), Corporate Affairs Minister
Sachin Pilot said that the industry should not think of it as another tax. The
ministry issued a statement saying that the government wanted companies to
have enough elbow room in deciding their CSR activities.

Pilot said that the government wanted to leave it to
corporates to decide on ways in which they wanted to conduct their CSR activities,
as long as they were justifiable and benefited society as a whole.

‘I think everyone is on board. There is no fear of
government acting as big brother. I am hoping that Indian economy and society will be able to get from these companies money to the tune of thousands of
crore,’ said Pilot.

Pilot also told media that his office would take up the
matter with the finance ministry to see whether the companies could get tax benefits
for their CSR spending.

The new Companies Bill, which has already been passed by Lok Sabha and is to be tabled in Rajya Sabha, proposes that the companies that
have Rs 500 crore net worth, or Rs 1,000 crore turnover, or Rs 5 crore net
profit, have to spend two per cent of (three-year average) net profit towards CSR. The
CSR report will have to be attached along with their annual financial report.  

Assuring that there will not be any interference from the
government’s side on the kind of CSR activities that a company should follow,
Pilot said, ‘I believe that it is the responsibility of corporate entities in
the country to give back to the community. In fact, if the government gets
involved, then there is a sense of where has our money gone, and what is the
end result. It becomes difficult to monitor. It becomes a tax.’  

‘All we are telling the companies is that it is your
business, your mining and your manufacturing and therefore it is also your
responsibility to build roads, toilets and to plant trees,’ Pilot emphasized.

‘It is your responsibility. We will not tell you what to do.
We are only telling you to do it and then report,’ he added.

Asked whether the companies would get any tax benefit for
CSR spending, Pilot said he would need to speak to the finance minister about
that and then see what could be done.

‘As per the bill, CSR spending is two per cent of the profit
before tax and therefore a kind of benefit is already available by way of
deduction from taxable income. I will speak to finance minister and see what we
can do,’ he said.