Terming the CSR rules notified by the government as a "positive step", industry body Ficci today said the move will impart flexibility to Boards of companies and pave the way for corporate sector to play a larger and more conscious role in shaping communities.
"We expect that the implementation will allow Boards all reasonable flexibility, as the underlying intent of the law is to promote self-regulation, non-intrusion and accountability," Ficci President Sidharth Birla said.
The government yesterday notified much-awaited rules for corporate social responsibility (CSR) that has in its ambit a wide range of activities, including livelihood enhancement projects and steps for the benefit of armed forces veterans.
The CSR rules would come into effect from April 1.
Under the new laws that govern companies, spending on CSR or social welfare activities is mandatory for certain class of firms. They are required to shell out at least 2% of their three-year average annual profit towards such works.
"Without clarity from the Finance Ministry, tax deductibility of CSR spend remains unclear. We are confident that given the approach of the Government, steps would be taken to ensure that CSR expenditure is not construed as a tax on business," Birla said.
Companies having net worth of at least Rs 500 crore or having minimum turnover of Rs 1,000 crore or those with at least net profit of Rs 5 crore, have to make CSR spend.
Livelihood enhancement and rural development projects, promoting preventive health care and sanitation as well as making safe drinking water available would be considered as CSR activities.
Working towards protection of national heritage, art and culture, including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicraft would also come under CSR ambit.
Various activities aimed at reducing inequalities faced by socially and economically backward groups have been included.
Measures for the benefit of armed forces veterans, war widows and their dependents, setting up homes and hostels for women and orphans, setting up of old age homes, day care centres and such other facilities for senior citizens would be considered as CSR work.
Other CSR activities would be ensuring ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water.
As per the release, training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports, contributions or funds provided to technology incubators located within academic institutions which are approved by the central government would also be CSR.
