Corporate default: Cases of corporates not filing CSR reports increases by 50 % during 2015-18

New Delhi, January 12, 2020: Companies shirking the mandatory CSR reporting to Ministry of Corporate Affairs (MCA) has substantially increased by more than 50 per cent over the last four years.

As per a report of Ministry of Corporate Affairs, as many as 9753 companies out of a total of 21,337 , did not file their Corporate Social Responsibility (CSR) report to the government for the financial year 2017-18.

Number of companies increase; CSR compliance fall

Though the total number of companies falling under the ambit of CSR act increased by 20 per cent, the CSR compliance significantly fell at fell to a low of 54 per cent. Three years back, in 2016, the compliance rate was much higher at 71 per cent.

Thus, there was a sharp increase of 50 % in the cases of non-comliance by the companies liable to mandatorily file their CSR report as per the CSR Act 2013.

As per the Act, companies with a net worth of Rs 500 crore or more, or a turnover of Rs 1000 crore or more, or a net profit of Rs 5 crore or more in the immediately preceding financial year are required to spend 2 percent of their average net profit of the preceding three years on CSR. The companies must disclose CSR related details in the Director’s Report in the format as prescribed in the Act. This section analyses CSR expenditures by Indian Corporate Sector.

CSR Complaince: Annual CSR  Report Filing Status

CSR reporting witness consistent dip

For the year 2015-16, about 71% of the companies which were liable to do CSR have reported the same to MCA. This percentage witnessed a marginal decline to 67% in 2016-17. For the year 2017-18, the reporting further fell at 54 %.

In case a company is liable for CSR obligation and is not reporting on CSR, 2% of the Average Profit Before Tax (PBT) for the three immediately preceding years is considered as ‘prescribed amount’ for CSR activities for that company.