CSR Committee, Activities and Expenses

Corporate social responsibility refers to the initiative and contribution of an enterprise towards the economic, environmental and social welfare of the general community. In this article, we look at some of the major aspects of CSR committee, CSR activities and CSR expenses. Know more about

Corporate Social Responsibility under Companies Act, 2013.

CSR Committee

The CSR committee of the Board must initiate the entire process by formulating a CSR Policy enlisting the activities to be pursued by the company. It should make a recommendation to the board on the estimated budget for the perusal of activities. Based on the recommendations, the Board will approve the expenditure on each activity stated in the CSR Policy. The CSR committee is vested with the responsibility of supervising and monitoring the implementation of CSR Policy. The funds allotted for the activities must be entirely spent on the stated purpose.

CSR Activities

The CSR committee is entitled to make a recommendation to the board on the activities to be pursued under CSR based on which, the board will finalize the CSR policy. Some of the main aspects of conducting CSR activities are as follows:

The CSR activity should not include the daily chores of business.
The Company (Corporate Social Responsibility Policy) Rules, 2014, permits an organization to undertake CSR activities through a registered trust/ registered society/ Section 8 company.
The CSR committee must set-up a monitoring and reporting system for utilization of funds for the CSR activities.
The company is also provided with an option of collaborating with other companies in a manner which helps the CSR committees of the respective companies to report separately on such projects or programs.
CSR activities of an Indian entity must only be conducted in India.

CSR Expenditure

Some of the main aspects of CSR expenditure are as follows:

Money spent outside of India on activities as per CSR Policy will not be a part of CSR expenditure.
Expenses incurred on employee welfare will be not be regarded as CSR expenditure.
Expenditure incurred by the company on building CSR capacities of their own employees, and employees of implementing agencies with track record of three years, including expenditure on administrative overheads will be deemed to be CSR expenditure, subject to the satisfaction of certain conditions.
Expenses incurred on payment to political parties will not fall under the ambit of CSR expenditure.
One-off events like marathons, awards, charitable contribution, advertisement, sponsorship of television programs etc wouldn't qualify as CSR expenses.
Remuneration paid to regular CSR staff as well as to volunteers of the company for the performance of CSR activities can be factored into CSR project cost as a part of CSR expenditure.
The expenditure incurred by foreign holding company for CSR activities in India will qualify as CSR spend of the Indian subsidiary, if the CSR expenditures are routed through Indian subsidiaries and if the Indian subsidiary is required to do so as per the Act.

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Frequently Asked Questions

Common questions about CSR Committee Activities and Expenses for India.

A CSR Committee is a committee formed by the Board of Directors of a company to oversee the implementation of its Corporate Social Responsibility (CSR) activities. Its main responsibilities include formulating the CSR policy, recommending CSR activities and budgets to the Board, monitoring the utilization of funds for CSR activities, and setting up a reporting system for CSR initiatives.

Activities that contribute to the economic, environmental, and social welfare of the community can be considered as CSR activities. These may include initiatives related to education, healthcare, environmental protection, poverty alleviation, and promoting gender equality, among others. However, the CSR activities should not include the company's regular business operations.

Yes, a company can collaborate with other companies for CSR activities. The CSR committees of the respective companies can report separately on such joint projects or programs. This allows companies to pool resources and expertise for more impactful CSR initiatives.

According to the Companies Act, 2013, CSR activities of an Indian entity must only be conducted within India. Any expenditure incurred on activities outside of India will not be considered as part of the company's CSR expenditure.

Expenditures incurred on building CSR capacities of the company's own employees and employees of implementing agencies with a track record of three years, including administrative overheads, can be considered as CSR expenditure. Additionally, remuneration paid to regular CSR staff and volunteers for performing CSR activities can be factored into CSR project costs.

Yes, there are certain expenses that cannot be considered as CSR expenditure. These include expenditures on employee welfare, payments to political parties, one-off events like marathons, awards, charitable contributions, advertisements, and sponsorship of television programs.

Yes, the expenditure incurred by a foreign holding company for CSR activities in India can qualify as CSR spend for its Indian subsidiary, provided that the CSR expenditures are routed through the Indian subsidiary and the Indian subsidiary is required to undertake CSR activities as per the Companies Act, 2013.

The Board of Directors plays a crucial role in CSR activities. Based on the recommendations of the CSR Committee, the Board approves the CSR policy, including the CSR activities and estimated budgets for those activities.

The CSR Committee is responsible for setting up a monitoring and reporting system for the utilization of funds for CSR activities. This system should track the progress of CSR initiatives, ensure funds are spent on the stated purposes, and provide regular reports to the Board and stakeholders.

Yes, the Company (Corporate Social Responsibility Policy) Rules, 2014 permit an organization to undertake CSR activities through a registered trust, registered society, or a Section 8 company. This allows companies to leverage the expertise and resources of external organizations for implementing their CSR initiatives.