Recently the Government of India has modified the relevant provisions, regulations by way of amendment in CSR policy related to CSR related duties and unspent corporate social responsibility unspent account.
The establishment of a CSR committee has been mandated by the government for businesses with any remaining funds in their CSR accounts. According to a formal announcement released by the Ministry of Corporate Affairs, the government has made changes to the regulations governing corporate social responsibility (CSR) in order to achieve this.
According to the Companies Act of 2013, certain classes of profitable businesses must devote at least 2% of their average net profit over the previous three company years to CSR initiatives within a given financial year.
As per the CSR regulations, the company is obligated to deposit funds in a special bank account known as the “Unspent Corporate Social Responsibility Account” for any funds that are still owed on an ongoing project or any surplus that remains after CSR operations have been completed.
According to the revised laws, a business must now adhere to CSR-related duties, such as creating a CSR committee, as long as there is money in its Unspent Corporate Social Responsibility Account.
Prior to the change, the amount of impact assessments that may be used to fulfil a company’s CSR requirements was set at 5% of total CSR expenses or Rs. 50 lakh, whichever was less.
This restriction has now been raised to the greater of two percent or Rs. 50 lakh, which will allow businesses to conduct thorough impact assessments for large-scale CSR projects and account for the results toward their CSR duty.
A new structure for the annual report on CSR activities has also been announced by the government and will be included in the board’s report for the financial year beginning on or after April 2020.
According to the structure, the enterprises must provide an executive summary and online links to impact assessments of their completed CSR projects in order to be considered for membership on the CSR committee.
Additionally, it mandates that the companies in question disclose information regarding the CSR budget allocated to both current and non-ongoing projects.
Other obligations include, among others, disclosing the make-up of the CSR committee, the CSR policy, and the CSR projects that have been approved by the board on the company website.
Spending on CSR initiatives is required of businesses with a net worth of at least Rs. 500 crore, a minimum annual revenue of Rs. 1,000 crore, or a net profit of at least Rs. 5 crore.
Fines and Penalties for Failure to Comply
A company will be subject to a minimum fine of Rs 50,000 and a maximum fine of Rs 25 lakh if it violates the rules governing CSR spending, transferring, and using the unspent funds. Additionally, any officer of such a company who fails to comply will be subject to a punishment that includes both both imprisonment for a time that may not exceed three years and a minimum fine of Rs 50,000 that may not exceed Rs 5 lakh.
Which activities are not acceptable under CSR activities?
The Companies (CSR Policy) Rules, 2014’s Rule 2(1)(d) defines CSR and lists the following acts as being ineligible for CSR activity:
* Activities undertaken in pursuance of the normal course of business of the company.
* Activities undertaken outside India, except for training of Indian sports personnel representing any state/UT at the national level or India at the international level \s
* Contribution of any amount, indirectly or directly, to any political party
![In light of the Supreme Court's EWS ruling, a petition seeks tax exemption for low-income families. The Madras HC issued Notice to the Union Government. Given the recent Supreme Court (SC) decision upholding the validity of the 103rd Constitutional Amendment providing reservation to economically weaker sections (EWS) of society with gross annual income below Rs7,99,999, the Madurai Bench of the Madras High Court (HC) has requested the response of the Centre on a petition (Case No: WP(MD) 26168 of 2022) challenging the fixation of Rs2,50,000 as the base income for the purpose of collecting income-tax. On Monday, the justice R Mahadevan and justice Sathya Narayana Prasad bench adjourned the case for four weeks and directed notice to the union ministries of law and justice, finance, personnel, and public grievance. Agriculturist and asset protection council member Kunnur Seenivasan, the petitioner, asked the court to invalidate the First Schedule, Part-I, paragraph-A of the Finance Act of 2022, which sets the rate of I-T. According to the Schedule, anyone whose combined income is less than Rs. 2,50,000 is free from paying tax. The petitioner contested this Schedule in light of the recent Supreme Court ruling in Janhit Abiyan v. Union of India, which upheld the 10% reservation for the economically backward community while also confirming that a family from a socially forward community with income up to the limit of Rs. 7,99,999 per year, excluding assets, is an EWS family. In his petition, the petitioner made clear that if the government decided to classify a certain group or section of people as EWS in order to receive reservations by establishing gross income, the same standard should be applied to all other groups of people and it shall not collect I-T from all EWS individuals. Therefore, it is necessary to declare the First Schedule, Part-I, paragraph-A of the Finance Act, 2022, [No. 6 of 2022], as ultra-vires and in violation of Articles 14, 15, 16, 21 and 265 of the Indian Constitution. In his suit, Mr. Seenivasan also stated that the objectives of other provisions found in Articles 15 and 16 of the Indian Constitution were defeated by the office memorandum issued by the Centre setting Rs 8,00,000 per year as the condition for economic reservation. The current I-T Act schedule is against the SC ruling since it would result in taxing the economically underprivileged citizens, who would then be unable to compete with those from the forward community in terms of status, education, or economics. Honourable Supreme Court maintains the constitutionality of the EWS quota in a majority decision. The Supreme Court ruled that the 10% EWS quota for the "poorest of the poor" among advanced castes posed no threat to the Constitution's Basic Structure. The 103rd Constitutional Amendment, which grants 10% reservation in government jobs and educational institutions to the "economically weaker sections of the society," was upheld by the Supreme Court's Constitution Bench in a 3:2 majority decision. However, it does not apply to the "poorest of the poor" among Scheduled Castes (SC), Scheduled Tribes (ST), Socially and Educationally Backward Classes (SEBC), and Other Backward Classes (OBC). The majority opinions on the five-judge bench were presented by Justices Dinesh Maheshwari, Bela M. Trivedi, and J.B. Pardiwala during an hour-long session that marked the first time a Constitution Bench decision was live aired. On his final day of employment, Chief Justice U.U. Lalit and Justice S. Ravindra Bhat presented the minority opinion that Justice Bhat had written. Justice Maheshwari took the broad view that reservation was a "instrument of affirmative action by the state" and should not be limited to just SCs, STs, SEBCs, and the non-creamy layer of OBCs, but also include "any class or sections so disadvantaged as to answer the description of "weaker section"" when addressing whether reservation on the sole basis of economic criteria violated the Basic Structure of the Constitution. The legislature "understands and recognises the demands of its own people," Justice Trivedi said. The three judges who made up the majority ruled that the Constitution's Basic Structure was not violated by reservations based solely on economic considerations. Justice Bhat and Chief Justice Lalit, who were in the minority, stated that while quota based on economic deprivation, destitution, and poverty were "per se permissible/valid" and even "constitutionally indefeasible," "othering" of socially and educationally disadvantaged classes, such as the SC/ST/OBC/SEBC communities on the grounds that they already benefit from a pre-existing 50% reservation on the basis of their caste and class origins The majority of the economically disadvantaged sector of society, according to government figures, belonged to SC/ST/SEBC/OBC, hence such an exclusion was simply "Orwellian," according to him. He said that of the country's 31.7 crore people living below the poverty line, the SCs make up 38% of the population, the STs 48.4%, and the OBCs 13.86%. Only 5.85% of people who live below the poverty line (BPL) belong to the forward castes or unreserved group. The petitioners had stated that only the "middle class" of the advanced castes who earned less than 8 lakh as a household annually were left to benefit from the EWS quota due to the exclusion of SC/ST/SEBC/OBC. It is impossible to describe the Amendment as a stunning, cynical perversion of equal justice. Equals cannot be handled unequally, and vice versa for inequalities. Treating unequals fairly will violate Article 14's equality clause, according to Justice Trivedi. The claim that the 10% EWS quota will exceed the 50% reservation cap was rejected by Justice Maheshwari. He said that the Supreme Court's 50% rule, established in the 1992 Indira Sawhney decision, was "not rigid." Furthermore, it had not been applied to the general category but just to the SC/ST/SEBC/OBC communities. But Justices Maheshwari and Bhat concurred that the state had the authority to enact unique rules for implementing reservation in for-profit schools, including professional colleges. The Amendment "cannot be considered to contravene Basic Structure by allowing the state to adopt special rules in connection to admission to private unaided institutions," according to Justice Maheshwari. Reservation cannot "per se be in violation of the Basic Structure" in institutions where education is provided, according to Justice Bhat. He said that if not for the exclusion of the other backward classes, the Amendment would be lawful.](https://caalokkumar.com/my-writing/wp-content/uploads/2022/12/Screenshot-2022-12-16-at-7.25.11-PM-150x150.png)