Don't treat CSR as an additional tax: Govt to companies
January, 02nd 2013
The government wants the companies to have enough elbow room in deciding their CSR activities, but these spendings should not be treated as an additional tax, Corporate Affairs Minister Sachin Pilot has said.
At the same time, the Ministry would take up the matter with Finance Ministry to see whether the companies can get tax benefits for their CSR (Corporate Social Responsibility) spendings, Pilot told PTI in an interview.
The new Companies Bill proposes that certain companies would need to spend two per cent of profits on CSR activities, unless they have a reasonable reason for not doing so.
Expecting "zero non-compliance" by the companies on this front, Pilot said that the government wants to leave it open- ended for the corporates to decided on ways in which they want to conduct their CSR activities.
"I think everyone is on board (on CSR). There is no fear of government acting as big brother. I am hoping that Indian economy and society should be able to get from these companies money to the tune of thousands of crores," he said.
Ruling out any interference from the government's side on the kind of CSR activities that a company should follow, Pilot said: "I believe that it is the responsibility of corporate entities in the country to give back to the community.
"In fact, if the government gets involved, then there is a sense that where has our money gone and what is the end result. It becomes difficult to monitor. It becomes a tax."
"All we are telling the companies is that it is your business, your mining and your manufacturing and therefore it is also your responsibility to build roads, toilets and to plant trees," the Minister said.
"It is your responsibility. We will not tell you what to do. We are only telling you to do it and then report. The companies that have Rs 500 crore net worth, or Rs 1,000 crore turnover, or Rs 5 crore net profit qualify for CSR, two per cent of (three-year average) net profit," he added.
Asked whether the companies would get any tax benefits for CSR spendings, Pilot said he would need to speak to the Finance Minister about that and then see what can be done.
"As per the bill, CSR spending is two per cent of the profit before tax and therefore a kind of benefit is already available by way of deduction from taxable income. I will speak to Finance Minister and see what we can do," he said.
"When corporates want to spend the money, then we should encourage it," he added.
The Minister said that the government has left "things little bit open ended so that corporates have an elbow room to decide on what to do".
"If we give a mandate, then they would say the government is telling us how to do our charity and contributions. We have given a list that is only suggestive," he added.