NEW DELHI: Corporate Social Responsibility (CSR) helps improve productivity but companies want the Goods and Services Tax (GST) removed from the legally- mandated practice, said a report by Teamlease Education Foundation.
It said CSR initiatives that are promoting upskilling and reskilling are gaining momentum and translating the labour productivity improvements. They also boost productivity, according to the report..
Growing 14 per cent per annum in the last six years, 55 per cent of all CSR contributions in India came from manufacturing, automotive, power and energy, and financial services industries. The report said that six states–Andhra Pradesh, Delhi, Gujarat, Karnataka, Maharashtra, and Tamil Nadu–accounted for over onethird of the total CSR spending in the country in FY21.
In 2014, India became the first country in the world to make CSR mandatory under the Companies Act, 2013. Companies must spend at least two per cent of the average net profits made during the three immediately preceding financial years on CSR.
The law does not mandate paying a direct GST on the 2 per cent CSR amount, but it must be paid on the goods and services bought or sold for various CSR activities. This might be for procuring cement, bricks and other materials for building schools or hospitals and other similar CSR activities. No input tax credit can be availed on such goods or services. A majority of India Inc. feels that CSR activities should be predominately viewed with philanthropic spirit but the unequal levy of GST makes it unjustified.
