The Ministry of Corporate Affairs (MCA) would soon prepare an action taken report on the suggestions of the high level committee that submitted its recommendations recently relating to the Corporate Social Responsibility (wp) norms.
The committee constituted by MCA was chaired by former Home Secretary Anil Baijal. The report pertaining to review the current framework of wp rules and improved monitoring under the Companies Act, 2013 in India was submitted in the first week of October.
The panel gave a list of recommendations to the government and suggested to be lenient on corporate firms for two to three years. Recommending going ahead with the current policy of “comply or explain”, the committee stated that in case of non-compliance, “leniency may be shown against the companies for non-compliance in initial two/ three years to enable them to graduate to a culture of compliance. This is being recommended because initial three years will be a period of learning for all the stakeholders.”
One suggestion also insisted on uniform tax laws. Currently some acts like donating in Prime Minister’s Relief Fund is exempted from taxation. The panel suggested having uniform tax rules for all acts.
“The (company) board’s decision could be guided more by tax savings implications rather than compelling community social needs. The committee therefore feels that there should be uniformity in tax treatment for wp expenditure across all eligible activities,” the panel report stated.
It also suggested that “government should have no role to play in engaging external experts for monitoring the quality and efficacy of wp expenditure of companies. The Boards/ wp Committees and the management are sufficiently empowered to engage any external firm, if they so require.
Sources said the Ministry has “largely accepted” the recommendations made by the panel.
After going through the suggestions in detail, the Ministry would soon prepare an action taken report and the same would be submitted to Corporate Affairs Minister Arun Jaitley.
Under the new companies’ law, certain class of profitable entities are required to shell out at least two per cent of their three-year annual average net profit towards wp activities.
The first year of its implementation was last financial year (April 2014-March 2015) and the compliance reports in this regard would be available by end of this year.