21 June, 2017
Co-authored by Abhisekh Shah, Kaushik PS and Priya Malebennur
In order to facilitate effective implementation of Corporate Social Responsibility (CSR), the Ministry of Corporate Affairs (MCA) has released a Circular on ‘Frequently Asked Questions’ (FAQs) with regard to CSR under Section 135 of the Companies Act 2013. The Circular follows closely on the heels of the release of a report by the High Level Committee set up by the MCA to suggest measures for improved monitoring of the implementation of CSR policies in October 2015, and provides clarity on some of the topics covered in the report. The key highlights of the Circular are:
The Circular reiterates that those activities that benefit only the employees or their families, one-off events, expenses towards fulfilment of regulatory statutes, contribution to political parties, activities as part of normal course of business or those undertaken outside of India do not qualify as CSR expenses. It also reiterates that the contribution to corpus of a trust/ society/ Section 8 companies etc. will qualify as CSR expenditure as long as the entity is created exclusively for undertaking CSR activities or where the corpus is created exclusively for a purpose directly relatable to a Schedule VII item.