New Delhi, March 17 The government has imposed penalties totaling nearly Rs 20 crore on various companies for non-compliance with CSR norms in the last three financial years.
Under the Companies Act, certain profitable firms are required to spend at least 2% of their three-year annual average profit on Corporate Social Responsibility (CSR) activities in a financial year.
Finance and Corporate Affairs Minister Nirmala Sitharaman told the Rajya Sabha on Tuesday that every decision on CSR spending is a decision made by the board of a particular company.
"A company and its board decide how much to spend and where to spend. Therefore, it is not a decision where we can intervene and say, 'you have to spend this much here'," the minister said.
She was responding to supplementary questions from BJP member Bhim Singh during Question Hour about low CSR expenditure in Bihar.
The total CSR expenditure in Bihar during the 2021-22, 2022-23, and 2023-24 fiscal years stood at Rs 680.91 crore by 854 companies.
Sitharaman told the Bihar member to continue engaging with different companies and emphasize the need for spending money in Bihar.
The minister said that at best, the ministry can only request companies to undertake a couple of socially important projects in Bihar, but this is not "legally enforceable".
Intervening, Rajya Sabha Chairman C P Radhakrishnan asked whether the norms could be changed so that underdeveloped states can benefit from CSR funds.
To this, Sitharaman said, "As chairman, you have said so. I can take this as a suggestion and see what I can do best."
According to a written reply, penalties of Rs 2.97 crore were imposed on six companies in 2022-23. In 2023-24, 11 companies were penalized with Rs 3.32 crore, and during 2024-25, 13 firms faced penalties of Rs 13.65 crore.
"The legal framework for CSR is provided through Section 135 of the Companies Act, 2013, Schedule VII of the Act, and the Companies (CSR Policy) Rules, 2014. Section 135 (7) of the Act specifies the provision for penalty in case of default of CSR obligation by the company," she said in the reply.
In case of default, both the company and the defaulting officer will be liable to a penalty.
"Whenever a violation of CSR provisions is reported, action against such non-compliant companies is initiated as per the provisions of the Companies Act, 2013, and the rules made thereunder, after due examination of records and following due process of law," she said.