1 | P a g e

VOL 1 - NOVEMBER

2014 VOL III February 2015

VOL 11- December 2015- January 2016

2 | P a g e

Message from the Chairman

Dear Readers,

I am glad to share the Eleventh edition of CSR newsletter. With the mandatory

provision of 2% spend on CSR; company’s performance on social indicators is on

rise. We are having regular interactions with the corporate leaders, organizations

government representatives, implementing agencies and business experts for

identifying and reviewing the practical solutions for better implementation of CSR

projects.

CSR committee conducted a session devoted to “Corporate Social Responsibility & US”

in the 110th Annual Session of the PHD Chamber of Commerce and Industry in which

Founder Sulabh International Social Service Organization, Dr. Bindeshwar Pathak

and Managing Director, Asian Hotel (West) Ltd. & Eminent Rotarian, Mr. Sushil

Gupta respectively aired their views on corporate social responsibility, urging

industry to contribute liberally for well being of society and take optimum

advantages of the incentives and taxes that follow with CSR.

For interesting article and event details please reconcile with the Eleventh edition of

CSR Newsletter.

We will be glad to have your article/publication in our newsletter and look forward

to your suggestions and will like to keep you informed through our monthly

newsletters.

Vinod Bansal

Chairman

CSR Committee

3 | P a g e

A reflection on CSR in India

Companies (Corporate Social Responsibility Policy) Rules, 2014; have been issued by

Ministry of Corporate Affairs (MCA), Government of India on February 27, 2014. The

Companies (CSR Policy) Rules, 2014 fall under the purview of Section 135 and schedule

VII of the Companies Act 2013 and came into effect from 1st April 2014. This mandated

the qualifying companies to contribute at least two percent of their annual Profit which

is primarily PROFIT BEFORE TAX (PBT) (as per the General Circular No. 01/2016 of

Government of India, Ministry of Corporate Affairs) on Corporate Social Responsibility

(CSR) initiatives. With this, India became the first ever country to pass a legislation on

moving CSR from mere voluntary actions to a compulsory one.

However, CSR clause does not mention any indicators for monitoring and evaluation of

CSR impact. There is no provision for companies to carry-forward any shortfall (Except

PSUs) in the mandated CSR spend to the next fiscal and the act has taken a ‘comply or

explain’ approach.

The Report Of The High Level Committee, headed by Shri Anil Baijal, stands with the

view that the Management and CSR committee of a company is competent enough to

decide the monitoring & evaluation framework for reporting the impact of CSR

projects, as such, the activities which are undertaken in programme mode should have

monitoring and Evaluation in the project design itself.

As per DPE guidelines PSU sector can carry-forward the unspent CSR amount to the

next financial year-over and above the next years CSR allocation of mandatory 2%,

unlike other private players but the High Level Committee has recommended that the

private players must also be provisioned to do the same. Recommendation of the high

level committee on getting away with differential tax treatment on the expenditure

levied on different activities under schedule VII is also a welcome step towards providing

an equal footing to all.

PSUs already had

prior guidelines

even before the

Companies Act

2013 so it must be

leading the

private sector not

trailing behind.

CSR activities are

the responsibility

of the companies

not the

government but

as per the

Companies Act;

the case of PSUs

is quite unique,

because in this

case the owner

and promoter of

the company is

the Government

itself.

4 | P a g e

According to the guidelines of Department of Public Enterprises (DPE), PSUs were expected to be spending

on CSR from 2010 but in a finding by Institutional Investor Advisory Services (IiAS), it has been reported that

in FY15, the average spent on CSR activities by the S&P BSE 100 stood at 1.5 %; of which 1.3 % of the average

profit of preceding three years was spent by 21 PSUs whereas Non-PSUs spent 1.6%. PSUs already had prior

guidelines even before the Companies Act 2013.

Some of the all the PSUs have not disclosed their CSR Policy and CSR expenditure in the prescribed format,

as per Rule (8) and (9) of Companies (CSR Policy) Rules, 2014 and not given the reasons for failing to spend

the required amount. The point to be noted is that, monitoring the CSR activities is the responsibility of the

companies not the Government but as per the Companies Act; the case of PSUs is quite unique, because in

this case the owner and promoter of the company is the Government itself. In an interesting finding by IiAS it

has come to limelight that 19 companies contributed INR 610.7 million to PM’s National Relief Fund; in fact

approximately 65% of the CSR spend in FY15 is on the lines of philanthropy. Contribution to the PMNRF by

companies as per the CSR guidelines gets tax exemptions under section 80 G of the Income Tax Act and

would also not attract any compliance issues. The High Level Committee suggest measures for improved

monitoring of the implementation of CSR policies and strongly opines that the tax benefit towards

contributions to PMNRF as CSR spend may turn out to be not in the spirit of Section 135 of the Act.

As per the Companies Act 2013 if a Company has not been able to spend the 2 % on CSR activities then it

must give the reasons for not spending. In case the Company not being able to give a satisfactory explanation

then Ministry of Corporate Affairs can question the directors but can’t do anything beyond that. The High

Level Committee recommended uniform tax treatment for all CSR activities and hold the view that the first

few years of legislation on CSR would be like a learning experience for all the stakeholders, hence it would be

a good idea to review the same after at least three years.

Key Highlights of the Report

Differential tax treatment for expenditure on various CSR activities may create distortion in the

allocation of funds across development sectors

There should be uniformity in tax treatment for CSR expenditure across all eligible activities.

Provide further clarity on applicability of Section 135, of the Companies Act, 2013.

Leniency may be shown to non-compliant corporate in initial two or three years to enable them to

evolve to a culture of compliance; these years can be considered be a period of learning for all the

stakeholders.

Liberal view can be taken at least for smaller companies,

Contd…

5 | P a g e

Government should have no role to play to engage external experts for monitoring the quality and

efficacy of CSR expenditure of companies.

Liberal view can be taken at least for smaller companies, Government should have no role in

monitoring of SCR expenditure and this should be entrusted to respective Boards.

We cannot be efficient with people; we need to be effective with them. The company is also an entity

which is headed by people. On this backdrop, the legislation on CSR is a welcome step but endeavor

must be to move from the compliance to consciousness and think on larger context of giving back to the

society in order to make it sustainable. As appropriately said, one cannot imagine death until he dies so

we must not be simply waiting to hit the Triple Bottom Line and take proactive measures to work for

common societal good.

It is imperative to mention that mandating the CSR spending by companies is not going to solve the

problems at large because, no company, however large or open can match the penetration of

Government. So, in light of this, it is not wrong to say that sensible policy framework, constructive

regulation based on proper monitoring and evaluation is an effective way to complement the CSR Rules

in Companies Act 2013.

Contd…

6 | P a g e

Event corner

Interactive Session on Corporate Social Responsibility & Us

110th Annual Session

Saturday, 28th November 2015 at Hotel Le Meridien, New Delhi

L-R: Dr. Jatinder Singh Sr. Secretary, PHD Chamber; Mr Gopal Jiwarajka, Sr. Vice President PHD Chamber; Dr Bindeshwar

Pathak, Founder, Sulabh Intl. Social Service Organization; Mr Alok B. Shriram, Immediate Former President , PHD Chamber;

Mr. Sushil Gupta, Mg. Director, Asian Hotel (West) Ltd. & Eminent Rotarian; Dr. Mahesh Gupta, President , PHD Chamber;

Mr. Saurabh Sanyal, Secretary General, PHD Chamber

The 110th Annual Session of the PHD Chamber of Commerce and Industry was concluded with a session

devoted to “Corporate Social Responsibility & US” in which Founder Sulabh International Social Service

Organization, Dr. Bindeshwar Pathak and Managing Director, Asian Hotel (West) Ltd. & Eminent Rotarian, Mr.

Sushil Gupta respectively aired their views on corporate social responsibility, urging industry to contribute

liberally for well being of society and take optimum advantages of the incentives and taxes that follow with CSR.

Dr. Pathak recalled that he has been associated with public cause for the Swachh Bharat since late 60s. and

expressed happiness that now with Prime Minister Mr. Modi at helm of affair, the dream of Swachh Bharat

7 | P a g e

would shortly be realized with contributions flocking in for it from multiple sectors such as government, NGOs,

public and private sector corporate and host of other stakeholders.

According to Dr. Pathak industry should take advantage of the CSR benefits and adopt clusters incase it is not

possible; a single corporate should come forward and make its contribution by adopting a village. This initiative

could prove contagious and the stakeholders involved in Swachh Bharat will be able to meet the target of

cleansing India, purging it from pervasive filth.

In his address Mr. Gupta quoted wisdom and examples inscribed in the holy books of all religion which lay

emphasis on cleanliness, stating that in all ages including that of primitive, someone came forward seeking public

help to ensure cleanliness.

At the prevailing time, the Prime Minister Mr. Modi has given the call for Swachh Bharat which can be realized if

all corporate come forward and makes their contribution.

The President, Sr. Vice President and Vice President PHD Chamber Mr. Alok B. Shriram, Dr. Mahesh Gupta and

Mr. Gopal Jiwarajka assured that the industry will certainly make its contribution and take part in Swachh Bharat

campaign with equal zeal and zest.

8 | P a g e

Upcoming Event

No planning is perfect, it always has an element of dynamism in the light of monitoring and evaluation but the

outcome that we envisage is to make the community independent and become the driver of their own growth.

So let’s give the ownership to the people who are the rightful owners of it. On this backdrop the 2nd National

Symposium for CSR Practitioners has been envisaged to accomplish the following objectives:-

Objectives:- To give a leading platform to corporate leaders, organizations, implementing agencies and business

experts to identify practical solutions for the problems concerning the participatory planning and

implementation of CSR projects at the ground level

To brainstorm a way forward to integrate CSR into core business values, and to give an opportunity to

network and build mutually enriching strategic relationships with various stakeholders and key partners

To share the success stories of innovative CSR interventions and dissemination of key information on

Section 135 and Schedule VII of the Companies Act as well as the provisions of the Companies

(Corporate Social Responsibility Policy) Rules, 2014 (CSR Rules) for an operational and comprehensive

understanding

Participant’s profile:-

Business leaders, Directors of Companies to gain valuable insights into emerging trends and issues

concerning CSR

CSR Heads, CSR committee members seeking creative and innovative ideas for CSR planning

Compliance Managers who wish to seek solutions and advise relating CSR

Civil society groups, Development sector organizations to explore partnership opportunities with

industries

Fundraisers seeking clarity of issues and trends relating to CSR

Social Entrepreneurs for mutually enriching networking and partnerships

CSR consultants for networking and partnerships

Academicians, Researchers to share their perspectives concerning challenges with leading businesses and

their collaboration with implementing agencies and other stakeholders

Registration Fee: - Rs. 4000 per delegate + Service Tax (14.5%)

Special Fee: - Rs. 3000 + Service Tax (14.5%) per delegate for Public Sector Employees/ Three or more

delegates from same organization/ PHD Members

Seats are Limited. Registration is on first come first served basis

Please send your nominations latest by 20th February 2016

9 | P a g e

10 | P a g e

Mr. Vinod Bansal

Chairman

CSR Committee, PHD Chamber

For suggestions / queries please contact:

Dr. Jatinder Singh Senior Secretary, PHD Chamber

jatinder@phdcci.in

Renu Rawat

Senior Asst. Secretary, PHD Chamber renu.rawat@phdcci.in

Pooja Mehta Snigdha Bhushan Executive Officer, PHD Chamber Executive Officer, PHD Chamber pooja.mehta@phdcci.in snigdha.bhushan@phdcci.in

PHD CHAMBER OF COMMERCE AND INDUSTRY

PHD House, 4/2 Siri Institutional Area, August Kranti Marg, New Delhi 110016 Tel: 91-11-26863801-04, 49545454 Fax: 91-11-26855450, 49545451

Website: www.phdcci.in E-mail: phdcci@phdcci.in

Disclaimer

CSR Newsletter is designed to provide information of some recent activities happening in the field of CSR. The information shared in this is for informational and

educational purpose only. None of the information should be considered for any kind of advisory services. The opinions and interpretations expressed within are

those of the author only and may not reflect those of other identified parties.

PHDCCI CSR Committee does not warrant the accuracy and completeness of this newsletter, nor endorse or make any representations about its content. In no event,

CSR Committee of PHDCCI will be liable for any damages, whatsoever, arising out of the use of or reliance on the contents of this newsletter.

PHDCCI CSR Committee will be liable for any damages whatsoever arising out of the use of or reliance on the contents of this newsletter.