New Delhi: The Government has tightened publication standards for non -profit organizations implementing projects of social responsibility (CSR) on behalf of the company and introduced a more detailed registration process to ensure only actual entities compatible with taxes receiving CSR funds.
According to the new version of the CSR-1 form issued by the Ministry of Business Affairs (MCA), Trust, Companies and Non-profit companies, they must now submit a more structured application with improved publication to be eligible to carry out CSR activities. The updated form, effective 14 July, reflects pressure to match corporate giving with the tax law and financial control.
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The aim of this step is to prevent Shell or false entities from accessing CSR funds and ensure that the recipient receiving the criteria set out in the income tax law.
It also expands the categories of eligible institutions.
In the last few years, the Ministry of Income Tax has increased the requirements for reporting for charity trusts to prevent abuse of this legal form for tax evasion.
The latest step to streamline registration for CSR implementation is part of the overall effort to improve transparency.
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The updated CSR-1 form also extends the scope of entities eligible for registration. Only those registered under Section 12a of the Income Tax Act, which is confirmed by the entity as a real charity institution, could apply within the earlier regime. The revised form now allows entities that qualify for tax exemption according to Section 10 (23C) of the Act, such as universities and hospitals, and also register for the work of CSR.
The new version of the form includes a more sophisticated field compared to an earlier format, explained Dandawate SuboDAWate, associated director, regulatory services in NexDigm, a business consulting company.
A key change in the revised form is a mandatory requirement to provide a copy of the registration certificate issued by the Ministry of Income tax according to sections 80g and 12a, under the Income Tax Act, AMIT Maleshwari of AKM Global, tax and consulting firms.
“This effectively means that implementation agencies must obtain income tax registration before receiving any CSR funds from corporations,” Maheshwari said. “The amendment is a progressive step towards greater transparency and regulatory compensation in the implementation of CSR, which ensures that CSR funds are only directed through a tax for verified and trustworthy entities.”
This step is expected to strengthen the trust of the parties and support the more efficient deployment of CSR funds, allowing companies to participate in credible and balanced partners in their social impact initiatives, Maheshware said.
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It also reflects wider political routing to match corporate philanthropy with regulatory administration and financial supervision, he said.
In FY24, more than 27,000 companies spent £34 900 Crore on CSR, led by HDFC Bank, Reliance Industries Ltd and Tata Consultancy Services. The number of trusts and other entities implementing CSR projects is not easily available.
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