A Parliamentary panel has suggested to the government that it impose penalty on corporates for not spending mandatory 2 per cent of their net profit on CSR activities. Currently, the penalty can be imposed for non-disclosure of CSR as per the Companies Act 2013, reports PTI.
“There is penalty for non-disclosure, there should be penalty for non-performance in the area of Corporate Social Responsibility (CSR),” Shanta Kumar Chairperson of Committee on Public Undertakings said.
It is important to disclose as well as spent the funds due for CSR purpose, he said, adding that “it should be made mandatory in the Act that funds due for CSR must be spent.”
The report which was tabled in the Lok Sabha on Friday said Ministry of Corporate Affairs or Department of Public Enterprises have apprised the Committee that CSR expenditure which was a voluntary initiative, has been made compulsory with the enactment of Section 135 of the Companies Act, 2013.
The second proviso provides that if the Company fails to spend specified amount under CSR, the Board shall in its report specify the reasons for not spending the amount.
The Committee strongly feel that the whole purpose of making the CSR spending as mandatory is defeated by the second proviso as a Company can get away easily by simply stating the reasons for not spending prescribed CSR allocations.
The panel headed by senior BJP leader also expressed serious concern over more than 50% of the allocations remaining unspent with these CPSUs, particularly when they have been implementing CSR for long and have experience and expertise in the field.
This article was taken from here.