Corporate India has expressed concern over Budget 2014-15 move to clarify that CSR spend made by companies in line with new company law obligation will not be tax deductible.

This issue of taxation of CSR spend was taken up with the Finance Minister Arun Jaitley by the CII members, Sumit Mazumder, President-Designate, Confederation of Indian Industry told Business Line after a closed-door post budget meeting with the Finance Minister here on Tuesday.

Describing the meeting as “very positive”, Mazumder said that the Finance Minister had conveyed to CII members the Government’s commitment and intent to support manufacturing in the country.

Earlier, in a separate CII organised interactive session with Revenue Secretary Shaktikanta Das, the Chairman and Managing Director of Hindustan Construction Company Ajit Gulabchand raised the issue of taxation of CSR spend.

“On one side, CSR has been mandated by the company law. Several ministries over the past few years like environment ministry have been mandating that CSR needs to be done.

Now you have (in budget) removed CSR as a tax deductible expenditure. Even if we give money for skills development, we need to pay tax. It amounts to only an additional tax”, Gulabchand said.

On his part, Revenue Secretary Shaktikanta Das defended the clarificatory amendment proposed in the Finance Bill.

“Company law is very clear. It says 2 per cent of net profit (for CSR). All that we have done is to ensure that it is 2 per cent of net profit”.

Corporate India had in the run-up to the Budget urged the Government to allow tax deduction on their Corporate Social Responsibility (CSR) spend mandated under Company Law.

But their requests were not accepted and no specific provision allowing tax deductibility of CSR spend has been introduced in the latest Finance Bill.

Srivats.kr@thehindu.co.in

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