Premature to say if cos are avoiding CSR spend: Govt
Jul 25 2014 , New Delhi
Under the new companies law, certain class of profitable entities are required to shell out at least 2 per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities.
Minister of State for Corporate Affairs Nirmala Sitharaman told the Lok Sabha that companies are at a preliminary stage of implementing the CSR norms since they have come into effect only from April 1 this year.
"It will be premature at this stage to form any opinion about any company resorting to tactics to avoid this statutory responsibility," she said in a written reply.
The minister was responding to a query on whether the government has taken note of clandestine modalities being adopted by companies to escape from making CSR spend.
Sitharaman further said: "Similarly, issues like expenditures incurred by companies on CSR and shortfalls, if any, could also be addressed after the first year is over and statutory returns are available with the Ministry of Corporate Affairs."
With regard to monitoring on companies' compliance with provisions of the Act, she said the main mechanism would be statutory audits.
"The main monitoring mechanism envisaged under the Companies Act is through observations of statutory audit for which the Institute of Chartered Accountants (ICAI) is developing 'guidance notes' so that auditors could adequately examine this issue," Sitharaman noted.