Corporate Social Responsibility in India

Corporate social responsibility – CSR is not new in India. For ages, entrepreneurs and business persons have tried to help the society at large through some or other means in its development. The word was not CSR, but the spirit was that of CSR. According to the ancient Indian wisdom, the social distribution of wealth was mainly guided by the holy Indian scriptures “The Vedas.” The Vedas attest that there will be an appropriate conveyance of wealth from the well off to poor people of the society. They additionally censure individuals who appreciate wealth without sharing it with others. While earlier CSR was a voluntary initiative adopted by the Indian companies, slowly, it has now become a mandatory obligation on the specified companies to comply with the various acts, guidelines, rules, and other legal obligations. In India, corporate social responsibility governance mechanism is enumerated in the accompanying enactments, guidelines, rules, and stock exchange’s listing agreements, viz., The Companies Act 2013, Securities and Exchange Board of India (SEBI), Standard Listing Agreement of Stock trades, Accounting Standards given by the Institute of Chartered Accountants of India – ICAI, Secretarial Standards given by the Institute of Company Secretaries of India – ICSI, and the Rules and Guidelines given by MCA, Ministry of Corporate Affairs. With the introduction of section 135 of Companies Act 2013, Corporate Social Responsibility – CSR is mandatory in India. Accordingly, any company having a turnover of ₹ 1000 Crores (₹ 10,000 Millions) or net worth of ₹ 500 Crores (₹ 5,000 Millions) or net profit of ₹ 5 Crores (₹ 50 Millions) during the preceding 3 years are mandatorily required to spent 2% of their net profits toward CSR. The CSR spending is to be done in accordance with the activities enumerated in Schedule vii of the Companies Act 2013. Thus, every company coming under the ambit of the above laws shall be required to form a CSR Committee, which shall be performing the following functions. Formulating and recommending to the board, a corporate social responsibility Policy, which shall highlight the focus areas of the company toward CSR. The committee shall also be indicating the activities that shall be undertaken by the company, in accordance with schedule vii of the Companies Act 2013. Upon the approval from the board, the CSR committee shall be implementing, monitoring, and reporting the CSR program of the company. The companies shall publish their CSR reports as per the given format in the annual reports of the company. The CSR report shall contain the total amount of budget and also how the companies have spent it as per the schedule vii of the Companies Act 2013. As of not long ago, if an organization couldn’t completely spend its CSR funds in a given year, it could convey the sum advance and spend it in the following monetary, in addition to the cash apportioned for that year. With the recent amendments to the Companies Act 2013, the companies are currently required to store the unspent CSR funds into a reserve endorsed under Schedule VII of the Act inside the finish of the financial year. This sum must be used inside 3 years from the date of move, bombing which the store must be saved into one of the predefined funds. The law recommends money-related punishment just as detainment, if there should arise an occurrence of resistance.