Home CATEGORIES Business Ethics & Philanthropy CSR Improves Productivity in Companies: Study

CSR Improves Productivity in Companies: Study

Companies have noted that Corporate Social Responsibility is beneficial not only to society but also to the companies as it helps in increasing productivity. However, according to a study, businesses want the Goods and Services Tax (GST) to be eliminated from the legally required practice of corporate social responsibility (CSR).

CSR Improves Productivity

The Report GST Levy on CSR, released by the Teamlease Education Foundation, stated that labour productivity increases as a result of CSR programmes that support upskilling and reskilling. This also boosts economic growth. Additionally, companies that develop CSR initiatives that are valuable to their staff and consistent with their beliefs can see how doing so directly contributes to accomplishing business objectives. The report stated that “CSR programmes are retaining employees and bringing in fresh talent by keeping them engaged and boosting productivity.”
55 per cent of all CSR contributions in India, which have increased by 14% annually over the past six years, came from the industrial, automotive, power and energy, and financial services sectors. Six states—Andhra Pradesh, Delhi, Gujarat, Karnataka, Maharashtra, and Tamil Nadu—were stated to have accounted for more than one-third of all CSR expenditures in India in FY21, according to the research.

Eliminate GST Levy from CSR Activities

Up to 97% of businesses think that GST undermines CSR initiatives. According to the Companies Act of 2013, India became the first nation in the world to make CSR mandatory in 2014.
Companies must dedicate “at least two per cent” of their annual net profits from the three financial years prior to CSR. The GST must be paid on the goods and services that are purchased or sold for various CSR activities, but it is not required by law to do so directly on the 2% CSR fee. This could be for purchasing cement, bricks, and other building supplies for hospitals, schools, and other CSR initiatives. Such items or services are not eligible for an input tax credit.
“A majority of India Inc feels that CSR activities should be predominately viewed with a philanthropic spirit, but the unequal levy of GST certainly makes it unjustified. 88 per cent of all firms surveyed are both aware of and opposed to the tax. Only 3 per cent of people are aware of and in favour of the GST levied on CSR initiatives,” said Ramani Dathi, director of TeamLease Education.