The Corporate Affairs Ministry (MCA) has come out with a new set of comprehensive Frequently Asked Questions (FAQs) updating the regulatory developments on this front so as to make the interpretation of the legal framework easier for stakeholders.

The latest FAQs have mainly clarified various issues around CSR at one place while withdrawing four earlier set of FAQs and clarifications that were issued from time to time.

It, in a way, takes the form of a Master circular that other regulators like RBI issue on various matters under their regulatory oversight.

This latest MCA move will come in handy for Corporate India which has in the last seven years spent over ₹1-lakh crore towards CSR. Of this nearly 40 per cent of the spends has happened in the fiscal years 2019-20 and 2020-21, according to a recent CRISIL Foundation analysis, which showed that pandemic related efforts dominated spending in the last fiscal.

Commenting on the latest MCA move, Anand Subramanian, Partner, Deloitte India said that the FAQs on CSR issued by MCA provide important clarifications related to various implementation questions for corporate India.

R&D spend on Covid

“The clarifications related to eligibility of expenditure incurred on R&D activities up to fiscal 2022- 23 by companies in the normal course of business for vaccines, drugs, and medical devices related to Covid-19 in collaboration with organisations specified under Item (ix) of Schedule VII is a welcome step and will provide impetus to corporate India’s fight against the pandemic”.

Also read: Covid jabs to be treated as CSR activity

Dinesh Anand, National Managing Partner- Risk and ESG at Grant Thornton Bharat said that one of the important areas in which the Ministry has issued a clarification is that the objective of CSR is to involve Corporates in social development through innovations and not to fill the resource gap in Government schemes.

“Further it has now been clarified that CSR spend is to be reported only after utilisation by the implementing agency/NGO. Other noteworthy clarifications include disallowing corpus contributions, no in-kind CSR contribution, detailing of penal provisions for non-compliance and clear definition for ongoing projects”, he said.

‘High importance areas’

Suraj Nangia, Partner- Govt. and Public sector Advisory, Nangia Andersen, said “Providing that contribution to Swachh Bharat Kosh, Clean Ganga Fund and other government funds shall qualify for CSR expenditure, effective channelisation to high importance areas has been ensured.”

Ruby Singh Ahuja, Senior Partner, Karanjawala & Co said that MCA has once again emphasised that CSR will always remain a Board driven process and it is the Board of a company that will decide the CSR policy. The government shall have no direct role in the approval and implementation of CSR programmes, she added.

Vaibhav Kakkar, Partner-Saraf & Partners, said that the revisions have been made to capture the current legal position on account of regulatory changes.

Aseem Chawla, Managing Partner, ASC Legal said the enabling legislation should rather incentivise good and constructive contribution to society. It is high time to make CSR as voluntary rather than mandatory, Chawla added.

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