CSR spending likely to be made mandatory

Chemical Weekly: The government is reportedly planning to tighten the Corporate Social Responsibility (CSR) provisions in the company law, virtually making it mandatory for companies to make their CSR spend, failing which they would be penalised.

Provisions to this effect – approved by the Union Cabinet – would come as part of the amendments to the company law that the Government is expected to move in Parliament in the coming days.

Under the proposed amendments, any unspent amount in a financial year has to be transferred to a CSR account, to be spent within the next three financial years. If after three years any amount is unutilised it has to be transferred to a Central Government-created fund specified in Schedule VII.

The proposed changes in CSR provisions would mean that India Inc. would lose the hitherto available leeway of not spending on CSR, but merely disclosing such a fact in the annual report that amounts were unspent due to specific reasons. Now, if the proposed amendments to the company law go through, the CSR non-compliance would invite penalties.