CSR Committee, Activities and Expenses

CSR Committee, Activities and Expenses

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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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Post by Sreeram Viswanath

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.