The panel will come up with ways to make disclosures on spending activities of companies more transparent, according to a top government official.
The government is planning to tighten corporate social responsibility (CSR) disclosure norms for corporates in India, a senior government official told Moneycontrol.
"We have formed a panel. The panel will suggest ways to make disclosures on spending activities of companies more transparent," the official said.
The panel is likely to propose forming an online portal from where corporates will have to pick projects listed by district-level government officers. After selecting the project one wishes to spend on, they will have to go through implementation agencies that are registered with the government.
"This report will be submitted by the panel next month hopefully," the official said.
Under the Companies Act, a company is required to spend two percent of its average net profit of the preceding three years on CSR if it had in any of those years net worth of Rs 500 crore or more, turnover/revenue of Rs 1,000 crore or more, or net profit of Rs 5 crore or more
The aim of the move is to make disclosures on companies spending CSR funds on trusts that are related to the group, more transparent.
"The idea is to make it transparent that such and such amount is being spent on foundations or trusts related to the companies, whether the company is spending more money in the local area of the company than in other areas," the official said.
As per the Companies Act, firms need to give preference to local areas and areas around their facilities for spending amounts earmarked for CSR. However, lately companies have been reportedly criticised for spending their CSR funds on facilities away from their local areas of operations.
According to a Crisil report, CSR spends by companies touched Rs 50,000 crore in the four fiscal years upto 2018, the unspent amount is higher at Rs 60,000 crore during the same period, underlining the need to improve the framework.There is also a case for ensuring robust due diligence before appointing an NGO/voluntary organisation partner, the report said, adding governance and impact achieved are two areas which need assessment.