Lok Sabha Question No. 305 (STARRED), answered on 2022-08-08
Subject: Incentives for Utilisation of CSR Funds
Ministry: CORPORATE AFFAIRS
Asked by: Uttam Kumar Nalamada Reddy

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

LOK SABHA STARRED QUESTION NO. 305 ANSWERED ON MONDAY, AUGUST 08, 2022/ SRAVANA 17, 1944 (SAKA)

## INCENTIVES FOR UTILISATION OF CSR FUNDS

## QUESTION

*305. SHRI UTTAM KUMAR REDDY NALAMADA:

Will the Minister of CORPORATE AFFAIRS कारपोरेट कार्य मंत्री be pleased to state:

- (a) whether there is any incentive mechanism in place to incentivise the effective utilisation of Corporate Social Responsibility (CSR) funds by the companies;
- (b) if so, the details thereof; and
- (c) if  not,  the  steps  taken/being  taken  by  the  Government  to  encourage  profit making companies to willingly undertake CSR activities as per CSR norms?

## ANSWER

THE MINISTER OF FINANCE

AND CORPORATE AFFAIRS                                       (SHRIMATI NIRMALA SITHARAMAN) ( श्रीमती विमयला

वित्त एिं कारपोरेट कार्य मंत्री सीतारामि )

- (a) to (c): A Statement is laid on the Table of the House.

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STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. *305  (5 th   Position)  FOR  08 TH   AUGUST,  2022  REGARDING  INCENTIVES  FOR UTILISATION OF CSR FUNDS

(a)  to  (c):  There  is  no  specific  incentive  mechanism in  place  to  incentivise the effective  utilisation  of  Corporate  Social  Responsibility  (CSR)  funds  by  the companies as this is  a  regulatory  requirement  under  the  Companies  Act,  2013 ('Act'). However, the Ministry has amended the CSR provisions of the Act to provide flexibility to the Board of companies to carry forward the unspent CSR amount as well  as  set-off  the  excess  CSR  spent  in  any  particular  financial  year  upto succeeding three financial years as per the requirements of CSR projects.

Further, on the recommendation of High Level Committee on CSR (HLC-2015), the Ministry  has  instituted  National  CSR  Awards  to  recognise  companies  for  their outstanding  contribution  through  CSR  initiatives.  These  awards  (Winners  and Honourable Mentions) are given to companies in three broad categories which are as follows:

- (i)  Corporate Awards for Excellence in CSR -Recognition to a company based on total eligible CSR spend (upto 4 awards).
- (ii)  Corporate  Awards  in  CSR  in  Challenging  Circumstances -Recognition  to  a company based on its CSR efforts in challenging circumstances, aspirational districts,  difficult  terrains/  disturbed  areas  and  others.  One  award  for  each region of the country i.e. North, North East, East, South & West (upto 5 awards).
- (iii) Corporate  Awards  based  on  contribution  to  National  Priority  Areas  such  as education, health, women & child development, etc. (upto 11 awards).

One award in each category is earmarked for Micro, Small & Medium Enterprises (MSME) only.

The First National CSR Awards Ceremony was held on 29th October, 2019 wherein 19  companies  were  awarded  as  'Winners'  and  19  companies  as  'Honourable Mentions '.

Furthermore, as per the input provided by Department of Public Enterprises (DPE), the  consolidated  Memorandum  of  Understanding  (MoU)  guidelines  for  the  year 2021-22 and onwards, inter-alia, provide that the aggregate score of Central Public Sector Enterprises (CPSEs) would be subject to compliance of guidelines issued by  DPE  from  time  to  time  on  CSR  expenditure  by  CPSEs  and  in  case  of  noncompliance of the same two marks would be deducted from the aggregate score.

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