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The Tax Publishers Companies Act, 2013--CSR CSR Contribution by Companies : Analysis CA. Deepak Harwani In the present article the learned author has made the detailed analysis of activities in which companies can contribute as the part of corporate social responsibility along the with limits and consequences in case of any eligible company eligible failed to contribute in CSR as per the specified provision. 1. Applicability in India Section 135 of the Companies Act, 2013 requires every company whose Turnover was Rs. 1000 crore or more, or Net Worth was Rs. 500 crore or more, or Net Profit was Rs. 5 crore or more during the immediately preceding financial year shall form a Corporate Social Responsibility (CSR) Committee of the Board having 3 or more directors, out of which at least 1 director shall be an independent director. If a company is not required to appoint an independent director under section 149(4), then committee should have at least 2 directors. Further, the Composition of the Committee should be disclosed in the Board's report as per section 134(3). Further, for foreign company, the balance sheet filed under section 381(1) (b) of the Act, shall contain an Annual Report on CSR. Provided that the provisions of CSR once applied should be followed for 3 years, despite of the fact that limits given under the section has not exceeded in subsequent years. 2. Expenditure on Corporate Social Responsibility The company in every financial year shall spend at least 2% of the average net profits (calculated as per section 198) made during the 3 immediately preceding financial years. If the company has not completed 3 financial years since its incorporation, then the provision shall apply for proportionate number of financial years held since incorporation. The expenditure of CSR as per the Finance Act, 2014 will neither be treated as business expenditure, nor deduction will be allowed for the same while computing taxable income as per the Income Tax, 1961. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Companies Act, 2013--CSR

CSR Contribution by Companies : Analysis

CA. Deepak Harwani

In the present article the learned author has made the detailed analysis of activities in which companies can contribute as the part of corporate social responsibility along the with limits and consequences in case of any eligible company eligible failed to contribute in CSR as per the specified provision.

1. Applicability in India

Section 135 of the Companies Act, 2013 requires every company whose

Turnover was Rs. 1000 crore or more, or

Net Worth was Rs. 500 crore or more, or

Net Profit was Rs. 5 crore or more

during the immediately preceding financial year shall form a Corporate Social Responsibility (CSR) Committee of the Board having 3 or more directors, out of which at least 1 director shall be an independent director.

If a company is not required to appoint an independent director under section 149(4), then committee should have at least 2 directors. Further, the Composition of the Committee should be disclosed in the Board's report as per section 134(3). Further, for foreign company, the balance sheet filed under section 381(1) (b) of the Act, shall contain an Annual Report on CSR.

Provided that the provisions of CSR once applied should be followed for 3 years, despite of the fact that limits given under the section has not exceeded in subsequent years.

2. Expenditure on Corporate Social Responsibility

The company in every financial year shall spend at least 2% of the average net profits (calculated as per section 198) made during the 3 immediately preceding financial years.

If the company has not completed 3 financial years since its incorporation, then the provision shall apply for proportionate number of financial years held since incorporation.

The expenditure of CSR as per the Finance Act, 2014 will neither be treated as business expenditure, nor deduction will be allowed for the same while computing taxable income as per the Income Tax, 1961.