Corporate India on Tuesday sought tax breaks on their spending towards Corporate Social Responsibility (CSR), as the Government is looking to make CSR spend mandatory through the Companies Bill.
The industry believes that providing tax breaks will incentivise CSR. Sachin Pilot, Minister of State for Corporate Affairs (Independent Charge), said he will take up the issue of tax breaks on CSR spends with the Finance Minister.
Pilot was speaking to reporters after an interaction with the industry chambers on the CSR issue.
Companies that have recorded an average net profit of Rs 5 crore in the past three years or clocked a turnover of Rs 1,000 crore or have a net worth of Rs 500 crore are proposed to be covered under the mandatory CSR norm.
Though the Government intends to make it mandatory for companies to spend two per cent of their profits towards CSR, compliance would be voluntary, Pilot said.
“The Government will not play the role of a watch-dog or invoke a inspector raj to ensure that companies implement the CSR spends,” Pilot said.
“We want to keep it transparent. The Ministry is looking to have a template on its Web site, where the companies can disclose their CSR spends,” Pilot said. If a company is unable to earmark or utilise the spends towards social development, it should explain or report to the Ministry, he said.
Companies that do not spend and report will face penalty of Rs 25 lakh or imprisonment up to three years under the Section 134 (O) of the proposed Bill, sources said.
The Companies Bill is now pending in the Lok Sabha and is likely to be taken up in the ongoing winter session of Parliament.