Commitment to social causes is best done voluntarily.
Accordingly, corporate social responsibility (CSR)
was originally introduced in Section 135 of the Companies Act, 2013
(Companies Act), in keeping with global best
practices, to provide a framework to encourage companies to
meaningfully contribute to communities.
The framework was premised on the principle that companies would
contribute the prescribed amount in good faith and the requirement
'to explain' any failure to contribute, in their board
report, was considered a sufficient disincentive to ensure
compliance.1
In a recent slew of changes, the Government, noting a
significant shortfall in compliance, seems to have veered away from
the aforesaid principle and has decided to implement a far stricter
regime.
