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CSR Companies Act,2013
 

CSR Companies Act,2013

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We at Shah Consultancy Services provide Consultancy in the ares of income tax, service tax, sales tax, Trust, Wills, family arrangements, corporate accounting, restructuring, Company Law and ...

We at Shah Consultancy Services provide Consultancy in the ares of income tax, service tax, sales tax, Trust, Wills, family arrangements, corporate accounting, restructuring, Company Law and Secretarial matters, Tax planning and many more service

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    CSR Companies Act,2013 CSR Companies Act,2013 Presentation Transcript

    • Corporate Social Responsibility(CSR)
    • INTRODUCTION (CSR)
    • INTRODUCTION (CSR)
    • TRANSITION TO THE ACT Repeal of the Companies Act, 1956 (“Old Law”) and transition to the Act
    • CLAUSE 135 REQUIREMENTS KEY HIGHLIGHTS
    • For whom (CSR)
    • CLAUSE 135 REQUIREMENTS – KEY HIGHLIGHTS Create Board Committee • CSR Committee of the Board 3 or more Directors, at least one Independent Director Spend & Reporting • Beginning FY2014-15 • Spend at least 2% of average net profits (before taxes) in last 3 years • Format specified in draft rules • Specify “reason” if spend is less than 2%
    • DRAFT RULES – CSR COMMITTEE & BOARD
    • DRAFT RULES – CSR COMMITTEE & BOARD Corpus of CSR Average net profits + Any income arising there from + Surplus arising out of CSR activities
    • DRAFT RULES – CSR COMMITTEE & BOARD
    • WHAT COUNTS IN 2%
    • WHAT COUNTS IN 2%
    • WHAT COUNTS IN 2%
    • WHAT DOESN’T COUNTS IN 2%
    • REPORTING FRAMEWORK CSR Policy, including web link if available  CSR Committee Average Net Profit for last 3 financial years Threshold Limit = 2% of above Explanation if spend is less than 2% Responsibility Statement of CSR Committee
    • REPORTING FRAMEWORK
    • RECOMMENDATIONS CSR Committee & Policy Broaden to encompass area of CSR work - Specific projects/programs defined by CSR Team - Promote other aspects of shared value such as environmental activities which go beyond the law Internal Include all “Full-Time Equivalents” (FTE) across CSR Team, volunteerism, and social business integration External Include Social Businesses that are not NGOs Implementation - Phased: FY2014-15 only reporting, no 2% mandate - Net Profits: Only profits made in India - Accounting: Below the line as an appropriation
    • FAQs
    • FAQs 1) Whether is applicable to Private limited and closely held public limited companies also? Ans : Yes, It is applicable to EVERY Company if ANY ONE of the following conditions during ANY financial year satisfies: a) Turnover > Rs 1000 cr. OR b) Net worth > Rs. 500 cr. OR c) Net Profit > Rs. 5 cr.
    • FAQs 2) Whether is Compulsory to have Corporate Social Responsibility Committee even if company has Separate Expenditure Committee who approves the major expenditure? Ans : Yes, As per Section 135 (1) of the Companies Act, 2013, says “Every company ...........shall constitute Corporate Social Responsibility Committee of the Board............” Hence, its compulsory to have Corporate Social Responsibility Committee of the Board. Its constitution includes : Three or more board members out of which at least one director shall be an independent director.
    • FAQs 3) What are the activities to be included in CSR? Ans: Schedule VII of the Companies Act,2013, specifies CSR activities. Schedule states “Activities which may be included in CSR policy are as follows : Eradication of hunger and poverty Promotion of education Promotion of gender equality and women empowerment Health - reducing child mortality, improving maternal health, combating HIV, AIDS, malaria Employment enhancing vocational skills Contribution to PM's fund or other fund set up by central govt or the state govts for socio-economic development and relief and funds for the welfare of SC, ST, backward classes, minorities and women Ensuring environmental sustainability Social business projects Such other matters as may be prescribed
    • FAQs 4) List of activities in Schedule VII are illustrative or mandatory activities to be included in CSR? Ans:Schedule VII of the Companies Act,2013 states “Activities which may be included in CSR policy” where as Clause states “CSR Policy which shall indicate………activities as specified in Schedule VII. There is conflicting view - As per the language , it is mandatory at the same time it is to be noted that Mr. Sachin Pilot , Hon’ble Minister of Corporate Affaires at an event held by corporate body CCI on 04th October,2013 stated that he was going to replace the word as mentioned in Schedule VII from “such other manner as may be prescribed” to “ as the company deems fit”. From this one may take a view that it is illustrative and not mandatory. But the same is yet to be clarified. Also note that the in reckoning spending of 2% of the “average net profit”; donation to charities, political donations and donations to National Defence Fund shall not be counted.
    • FAQs 5) If you have a CSR activity in which you open a school and if you make a profit. Is it a CSR activity? Ans: Hon’ble Minister of Corporate Affaire while replying the debate on the Bill in Lok Sabha on 18-12-2012 clarified that certainly it will not be a CSR activity. The idea is not to make profit from a CSR budget. The idea is to give better quality of life to the people that you are working along with.
    • FAQs 5) Would CSR spending be allowed as a Deduction under Income Tax Act? Ans: It may be viewed as an Appropriation of profit and hence, not allowable at the same time one may also take another view that is it an overriding obligation created by law, although computed with reference to profits, and hence, allowable. Examples : -Maysore Kirloskar Limited(Kar) - Even if expenses is a donation, it is yet deductible u/s 37(1). -HPCL(Mum ITAT) - Expenses on 20-point programme at instance of Govt., allowable since done as a responsible corporate citizen. However, Tax Treatment of CSR spend will be in accordance with the IT Act, as may be notified by CBDT.
    • TASK AHEAD
    • WHERE CAN WE ASSIST?
    • THANK YOU