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The new Modi-led Government has excluded one-off events such as marathons, awards, charitable contributions, advertisements and sponsorship of TV programmes from the ambit of CSR spends.
The Corporate Affairs Ministry (MCA) has now said that CSR activities should be undertaken by companies on a project/programme mode and expenses on one-off events will not qualify as CSR expenditure under the new company law.
This forms part of several clarifications issued by the corporate affairs ministry on the Corporate Social Responsibility (CSR) front.
“The objective of excluding the one-off events seems to be to encourage long-term sustainable activities.
But the so called one-off events could be repetitive and have a lasting impact on the community. There may not be a need to draw a distinction between one-off and other activities”, Sudhir Kapadia, Partner and National Tax Leader, EY told Business Line.
Ramesh Vaidyanathan, Managing Partner, Advaya Legal, a law firm, said that the latest clarification from the corporate affairs ministry has created further ambiguity in the Ministry’s anxiety to micromanage the issue.
“There is no rationale for excluding one-off events such as marathons/ awards/ charitable contributions/ advertisements/ sponsorships of TV programmes, etc. from CSR expenditure. This may in fact result in migration of valuable corporate resources from these meaningful activities”, Vaidyanathan said.
With the new Act already establishing the broad principles and safeguards on end-use of CSR funds, the choice of activities and the mode of execution should be left to the corporates, he said.
MCA should vigilantly watch out for misuses and regulate matters a couple of years down the lane, he added.
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