Apex industry body Ficci has suggested that the government should encourage companies to invest in corporate social responsibility initiatives by giving tax incentives instead of making it binding.
"The government may consider incentivising CSR( corporate social responsibility) activities perhaps through tax incentives...Create a market for CSR credits like carbon credits," Ficci said in its CSR draft on which the Ministry of Corporate Affairs has invited comments from the public by December 10.
The industry body also suggested that CSR activities should not be made mandatory and companies should be encouraged to adopt the norms on voluntary basis.
"If such a compulsion (of CSR) is imposed on companies... it may turn counter productive as companies may resort to camouflaging activities to meet such regulations, particularly, during recessionary periods and economic downturns," the chamber argued.
Earlier, Corporate Affairs Minister Salman Khurshid had said issues like the annual spend on CSR would be debated by the Parliamentary Standing Committee, which is scrutinising the provisions of the new Companies Bill tabled in Lok Sabha in August.
"We need to go beyond affirmative action and CSR efforts could be given a fillip through fiscal relief... These issues need to be debated threadbare for their possible incorporation in new Bill," Khurshid had said.
The report further suggested that companies should earmark specified resources or a proportion of their Post Tax Profit for CSR initiatives.
Besides, the chamber also advocated for a CSR Advisory Committee led by an expert, to facilitate executive participation in forming a CSR policy and also specify a time after which the policy could be reviewed.
"To ensure optimum utilisation of resources and maximum impact the company shall set measurable target, wherever possible and review the progress internally. Periodically the company may get external evaluation as may be considered appropriate by it," the draft said.
