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CSR spending sees a 28% surge in 2016-17

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As per the mandates of the Companies Act, 2013, companies in India, including CPSEs fulfilling threshold limits with a net profit of more than US$750,000 (Rs 5 crores) in a single financial year are required to spend a minimum of two percent of their average net profits of the last three years (before tax) for social causes in the country. This is listed in the Schedule-VII to the Companies Act, 2013.

 

top-performing-statesThis spending comes under the corporate social responsibility (CSR) initiative, and can apply to small and medium-sized (SMEs) companies as well – if they fall into the profit-linked criteria. A company undertaking CSR projects does not receive any additional tax exemptions. But exemptions may be granted for agricultural, health, rural, and skill development projects, among others, under the Income-tax Act, 1961.

 

As far as Central Public Sector Enterprises (CPSEs) are concerned, selection of activities/ projects and the area for undertaking CSR activities along with activity/project-wise allocation of funds is done on the recommendations of CSR Committee constituted in CPSEs, with the approval of respective Boards of CPSEs. Besides, the Department of Public Enterprises (DPE) has been regularly holding workshops/conclaves with CPSEs for sensitizing the concerned executives for ensuring proper selection of CSR activities/ projects and utilization of CSR funds as per the CSR provisions of Companies Act, 2013, CSR Rules and Schedule-VII of the Act.

 

While the total amount spent on CSR in 2016-17 is 4719 crore, out of which Rs 3,393.17 crore was spent by private sector companies while Rs 1,325.83 crore came from public sector undertakings. This amount was shelled out in the first eight months of the current fiscal, with private sector entities accounting for major chunk of the expenditure, according to the government.

 

company-csr-spendingThe prescribed CSR budget of Indian corporate has increased by 28% in FY 2016-17 since FY 2014-15 while the actual CSR spend has gone up by 47% during the same time, another report said.

 

This substantial increase in CSR funding in the last financial year has given a further push to quality education initiatives along with intensifying Skilling India Mission and Swachh Bharat Mission of the Government of India. Urban slum development and welfare for army veterans received little attention from businesses with Rs 34Cr spent in both of these areas, while technology incubation for start-ups is gradually gaining the pitch with Rs 20 cr. Healthcare projects received 17% of the CSR fund.

 

The total number of CSR projects undertaken was 11597 in 29 different development sectors. In 2015-16, the Corporate Social Responsibility (CSR) expenditure was Rs 13,827.86 crore, higher than Rs 9,564.77 crore recorded in 2014-15.

 

However, the report also points out that 1/3rd of the companies could not meet the mandatory CSR while 1/3rd of the companies spend more than the prescribed CSR.

 

total-csr-projectAs per the data received, Bilaspur-based South Eastern Coalfields Limited (SECL), a miniratna PSU, failed to spend even the fifty percent of the budgeted amounts the company has earmarked under the CSR in the FY 2016-17. This was stated in the organisation’s annual report. The total prescribed CSR budget allocated for the FY 2016-17 was Rs 120.24crore, against which SECL has spent Rs 42.50 Crore. The unspent CSR amount is Rs 77.74 Crore.

 

On the other hand, by spending Rs 277.81 Crore on CSR and sustainable development during the financial year 2016-17, NTPC Limited has surpassed the prescribed two percent amount of Rs 227.85 Crore by Rs 49.96 Crore, thus achieving a CSR spend of 2.96 %. This was revealed in its Annual Report for 2016-17. The average net profit of the Company for the previous 3 financial years was Rs 11392.68Crore, and accordingly the prescribed CSR Expenditure (2%) was Rs. 227.85 Crore.

 

 

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