Whether CSR expenditure of a company can be claimed as a business expenditure?

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The Finance Act, 2014 provides that any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. Accordingly, the amount spent by… Read more »

Where CSR activities lead to profits, how should such profits be treated?

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Rule 6(2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 provides that the CSR policy of the Company shall specify that the surplus arising out of the CSR projects or programs or activities shall not form part of the business profit of a company. This impliedly means that the surplus arising out of CSR… Read more »

Are the provisions with regard to CSR applicable to foreign companies?

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In terms of Rule 3(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2013, a foreign company having its office or project office in India which fulfils the criteria specified in Section 135(1) is required to comply with the provisions of Section 135 of the Act and the Rules thereunder. The networth, turnover or net… Read more »

In case of companies having multi-locational operations, which local area of operations should the company choose for spending the amount earmarked for CSR operations?

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Proviso to Section 135(5) of the Companies Act 2013 provides that a company shall give preference to the local area and the areas around it where it operates for spending the amount earmarked for CSR activities. In case of multi-locational operations, the company could exercise discretion in choosing the area for which it wants to… Read more »

From which Financial Year does the CSR expenditure and reporting begin?

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Since section 135 relating to Corporate Social Responsibility and schedule VII have become effective from April 01, 2014, every company which meets the criteria specified under sub-section (1) of section 135 is required to comply the same from April 01, 2014. Companies have to spend the amount on CSR activities as required under section 135… Read more »

There are certain corporate groups who run hospitals and educational institutions, will this be considered as CSR?

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Here are two conditions – If the hospitals and educational institutions are part of the business activity of the company they would not be considered as CSR activity. if some charity is done by these hospitals or educational institutions, without any statutory obligation to do so, then it can be considered as CSR activity. There… Read more »

In case the company has appointed personnel exclusively for implementing the CSR activities of the company, can the expenditure incurred towards such personnel in terms of staff cost etc. be included in the expenditure earmarked for CSR activities?

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In General Circular No. 21/2014 dated 18th June, 2014, The Ministry of Corporate Affairs clarifies that Salaries paid by the companies to regular CSR staff. In case of proportion can be factored into CSR project cost as part of the CSR expenditure. The word ‘Company‘ is an amalgamation of the Latin word ‘Com’ meaning “with… Read more »