Facts you must have to know about Corporate social responsibility (CSR)

1. Corporate social responsibility (CSR) is a broad concept that can take many forms depending on the company and industry. Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands.

2. As important as CSR is for the community, it is equally valuable for a company. CSR activities can help forge a stronger bond between employees and corporations, boost morale and help both employees and employers feel more connected with the world around them.

3. Section 135 of the Companies Act, 2013 contains the provisions CSR which prescribes that companies which cross the prescribed threshold are required to spend, in every financial year, at least 2%. of the average net profits of the company made during the three immediately preceding financial years.

4. However the MCA with a view to improve the CSR environment and the functioning of NGOs operating in India & rendering CSR support services to the companies, vide its Company Law notifications dated 22nd January, 2021, had introduced substantial amendments to the CSR provisions under the Companies Act, 2013.

5. Under the new norms, also major changes have been introduced with respect to the NGOs who implement the CSR projects as the PIAs (Project Implementation Agencies), on behalf of the companies. Key changes w.r.t the NGOs are presented below:

6. A Company is permitted to undertake the CSR activities either itself or through:

• Section 8 company, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961, established by the company, either singly or along with any other company, or
• A Section 8 company  or a registered trust or a registered society, established by the Central Government or State Government; or
• Any entity established under an Act of Parliament or a State legislature; or
• A section 8 company ,or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.

7. Therefore as indicated above, the NGOs falling under category (a) or (d), are required to have 12A and 80G registration(s) under the Income Tax Act, 1961, in order to carry out the CSR activities.

8. Besides these changes by the MCA, the government had earlier also asked the NGOs to re-validate their existing 80 G and 12 A registrations with the IT department under the Income Tax Act, 1961.

9. With a view to further strengthen the CSR environment, the NGOs, who intends to undertake CSR activities are now required to obtain mandatory CSR Registration Number (CRN) by filling form CSR -1 with the Ministry of Corporate Affairs w.e.f 01, April, 2021. The CSR -1 form is an online application which should be filled by the NGOs, if they intend to do any CSR activity. On registration, a unique CSR Registration Number will be allotted to the applicant(s).