Context:
The Ministry of Corporate Affairs (MCA) has introduced stricter registration and disclosure requirements for non-profit entities executing Corporate Social Responsibility (CSR) activities on behalf of companies, aimed at curbing misuse and aligning CSR funding with tax compliance and financial scrutiny.
Key Highlights:
- Revised Form CSR-1 Issued:
- Effective from 14 July 2025, a new version of Form CSR-1 mandates enhanced disclosures from trusts, societies, and Section 8 companies seeking to implement CSR projects on behalf of corporates.
- Objective:
- Prevent bogus or shell entities from accessing CSR funds.
- Ensure alignment with Income Tax Act provisions, particularly Sections 12A, 80G, and 10(23C).
- Enhance transparency and accountability in the CSR ecosystem.
- Expanded Eligibility:
- Earlier, only institutions registered under Section 12A of the IT Act were eligible.
- Now includes universities and hospitals qualifying for exemptions under Section 10(23C), broadening the CSR implementing agency base.
- Mandatory Tax Compliance Documents:
- Entities must now submit IT registration certificates under 80G and 12A, wherever applicable.
- Income tax registration is prerequisite for receiving CSR funds from companies.
Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) is a business approach where companies integrate social and environmental concerns into their operations and interactions with stakeholders. It’s a way for businesses to voluntarily contribute to a better society and a cleaner environment, going beyond just profit-making.
Key Aspects of CSR
- Beyond Profit:
- Focus on societal good alongside business goals.
- Addresses the triple bottom line: People, Planet, Profit.
- Stakeholder Engagement:
- Recognizes interests of employees, customers, communities, suppliers, and the environment.
- Ethical Conduct:
- Promotes transparency, fair labor standards, anti-corruption, and responsible marketing.
- Environmental Sustainability:
- Efforts to reduce pollution, energy consumption, and adopt green technologies.
- Community Involvement:
- Volunteering, financial contributions, and development projects in local communities.
Examples of CSR Activities
| Type of CSR Activity | Examples |
|---|---|
| Philanthropy | Donations to NGOs, funding schools or hospitals |
| Volunteering | Employees participating in community clean-ups or literacy missions |
| Environmental Initiatives | Renewable energy use, recycling programs, carbon offsetting |
| Ethical Supply Chains | Ensuring fair wages and safe working conditions in supplier factories |
| Community Development | Infrastructure support, skill training, sanitation and healthcare drives |
