CSR Committee, Activities and Expenses
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.