Summary of amendments are as under;
1. Constitution of CSR Committee is now mandatory where the Company has any amount in its “Unspent CSR Account” in terms of any ongoing project as per Section 135(6) of the Companies Act 2013. Further, such company should continue to comply with the CSR provisions specified in Section 135.
2. Earlier, CSR provisions once applicable in any financial year on meeting the threshold requirements of net worth, turnover or net profit, then it remained applicable for three years. CSR provisions was no longer applicable when a company ceased to meet the threshold requirements under 135(1) for three years. In this amendment, this sub-rule 2 under rule 3 of CSR Rules has been omitted. So once CSR provisions become applicable in a year, it will be applicable in that year only.
3. CSR implementing agencies undertaking CSR activities- Entities established by the company itself or along with any other company or other companies are allowed to be undertaken through registered public trust/ society which is exempted under section 10(23C)(iv), (v), (vi), and (via) or registered under section 12A and 80G of the Income Tax Act, 1961 (earlier only those registered under section 12A and 80G of the IT Act could undertake such activities).
4. Expenditure on impact assessment reports are now allowed at 2 percent of total CSR expenditure or Rs. 50 Lakhs, whichever is higher (earlier 5% or 50 lakhs whichever is lower) ;
[Impact assessment reports are placed before the Board and annexed to the annual report on CSR and are applicable for projects completed only on or after January 22, 2021 (to be mandatorily undertaken by the companies for projects exceeding Rs. 1 crore and where the average CSR obligation of the companies for 3 immediately preceding years exceeds Rs. 10 crores)].
5. CSR Reporting – Revised format of Annexure-II for the Annual Report on CSR activities to be annexed to the Board’s report.
Regards
CA Sumit Garg
