In exercise of the powers conferred by sub-section 3 of section 1 of the Companies Act, 2013 (18 of 2013), the Central Government appoints the 1st day of April, 2014 as the date on which Schedule VII shall come into force.
In other words, the Ministry of Corporate Affairs (MCA) vide its Notification Number S.O. 582(E) dated 27th February, 2014 has come up with the Schedule VII for CSR activities to be included in CSR Policies.
Activities to be included in CSR Policies
The following activities to be included by companies in their Corporate Social Responsibility (CSR) Policies:
i) Eradicating hunger, poverty and malnutrition promoting healthcare including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water;
ii) Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
iii) Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
iv) Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund setup by the Central Government for rejuvenation of river Ganga;
v) Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;
vi) Measures for the benefit of armed forces veterans, war widows and their dependents;
vii) Training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports;
viii) Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
ix) Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
x) rural development projects;
xi) slum area development.
As per the explanation the term ‘slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.
The principal commencement notification for Schedule-VII was published in the Gazette of India vide S.O. 582(E) dated 27-02-2014. Further, the Schedule-VII was amended vide Notification No. G.S.R. 130(E) dated 28-02-2014, Corrigenda No. G.S.R. 261(E) dated 31-03-2014, Notification No. G.S.R. 568(E) dated 06-08-2014 and Notification No. G.S.R. 741(E) dated 24-10-2014.
As per the clarification issued vide General Circular No. 21/2014 dated 18.06.2014, contribution to Corpus of a Trust/ society/ section 8 companies etc. will qualify as CSR expenditure as long as:
(a) The Trust/ society/ section 8 companies etc. is created exclusively for undertaking CSR activities; or
(b) Where the corpus is created exclusively for a purpose directly relatable to a subject covered in Schedule VII of the Act.
Clarification for Additional items covered under Schedule VII
In accordance with the clarification issued vide General Circular No. 21/2014 dated 18.06.2014, following additional items has already been covered under Schedule VII of the Companies Act, 2013.
1) Educating the Masses and Promotion of Road Safety awareness in all facets of road usage.
[Covered under Schedule VII (ii) under “promoting education”.]
2) Drivers’ training.
[Covered under Schedule VII (ii) under “vocational skills”.]
3) Safety traffic engineering and awareness through print, audio and visual media” should be included.
[Covered under Schedule VII (ii) under “promoting education”.]
4) Giving medical and Legal aid, treatment to road accident victims.
[Covered under Schedule VII (i) under “promoting health care including preventive health care.”]
5) Provisions for aids and appliances to the differently- able persons – ‘Request for inclusion.
[Covered under Schedule VII (i) under ‘promoting health care including preventive health care.’]
6) Capacity building for farmers covering best sustainable farm management practices.
[Covered under Schedule VII (ii) under “Vocational skill” livelihood enhancement projects.]
7) Training Agriculture Labour on skill development.
[Covered under Schedule VII (ii) under “Vocational skill”.]
8) Doing our own research on the field for individual crops to find out the most cost optimum and Agri – ecological sustainable farm practices. (Applied research) with a focus on water management.
[Covered under Schedule VII (iv) under ‘Ecological balance’, ‘maintaining quality of soil, air and water’.]
9) To do Product Life Cycle analysis from the soil conservation point of view.
[Covered under Schedule VII (iv) under “Conservation of natural resource” and ‘maintaining quality of soil, air and water’.]
10) Providing effective consumer grievance redressal mechanism; Protecting consumer’s health and safety, sustainable consumption, consumer service, support and complaint resolution; Consumer protection activities; Consumer Rights to be mandated; All consumer protection programs and activities” on the same lines as Rural Development, Education etc.
[Covered under Schedule VII (ii) under ‘promoting education’.]
11) Donations to IIMA for conservation of buildings and renovation of classrooms.
[Conservation and renovation of school buildings and classrooms relates to CSR activities covered under Schedule VII (ii) under ‘promoting education’.]
12) Non Academic Techno park TBI not located within an academic Institution but approved and supported by Department of Science and Technology.
[Covered under Schedule VII (ii) under ‘promoting education’, if approved by Department of Science and Technology.]
13) Disaster Relief
Disaster relief can cover wide range of activities that can be appropriately shown under various items listed in Schedule VII. For example,
(i) Medical aid can be covered under ‘promoting health care including preventive health care’.
(ii) Food supply can be covered under ‘eradicating hunger, poverty and malnutrition’.
(iii) Supply of clean water can be covered under ‘sanitation and making available safe drinking water’.
14) Trauma care around highways in case of road accidents.
[Covered under Schedule VII (i) under ‘health care’]
15) Supplementing of Govt. schemes like mid-day meal by corporates through additional nutrition.
[Covered under Schedule VII (i) under ‘poverty and malnutrition’]
16) Enabling access to, or improving the delivery of, public health systems.
[Depending on the context, it shall be covered under both the heads of Schedule VII “health care” or “measures for reducing inequalities faced by socially & economically backward groups”.]
17) Slum re-development or EWS housing.
[Covered under Schedule VII (iii) “measures for reducing inequalities faced by socially & economically backward groups.]
18) Renewable energy projects.
[Covered under Schedule VII (iv) under ‘Environmental sustainability, ecological balance and conservation of natural resources’]
Activities not covered under Schedule VII
The following items shall not be treated as CSR activities:
- Training to enforcement personnel. [It is establishment functions of Government (cannot be covered)]
- Capacity building of government officials and elected representatives – both in the area of PPPs and urban infrastructure. [Not covered under Schedule VII]
- Sustainable urban development and urban public transport systems. [Not covered under Schedule VII]
- US-India Physicians Exchange Program – broadly speaking, this would be program that provides for the professional exchange of physicians between India and the United States. [Not covered under Schedule VII]