Browse Category: Cess

Corporate Social Responsibility


CSR might be defined as corporate strategic philanthropy, even narrowed to “effective public relations” where the excellence of the organization and build accommodating relationships with stakeholders. It can be viewed as cause-related marketing. At best, it can be conceived of as knowing, achieving, and communicating about higher standards of performance in the public or community interest.

Consideration of corporate social responsibility is as old as organizations themselves. The central question always has been this: Does each organization, as it strives to achieve its mission and vision, add value to the society which explores its existence? Long before consideration focused on business, especially large corporations, questions about CSR addressed the rationale and acceptability by the government.

Here are the related provisions that are dealt with Corporate Social Responsibility in accordance with Companies (corporate social responsibility) Rules 2014.     Provisions Description/ explanations
1. Governance
  • Sec.135 of Companies Act,2013
2. Applicability


  • Every Companies having net worth of Rs.500 crores or more. (or)
  • Every companies having turnover of Rs.1000 crores of more. (or)
  • Every companies having net profit of Rs.5 Crores or more.
3. Minimum limit for Spending
  • Atleast 2% of their Average net profits accrued over last 3 years.
  • List of Activities may be initiated on CSR projects have been specified in schedule 7 of the Act, along with board’s approval.

4. Methods of implementation
  • On Suo-motto basis

  • Via Not for profit venture setup.

  • Collaborating or pooling their resources with other companies.

5. Domains where CSR activities are carried in
  • Education
  • Communication Ecology and health care
  • Business sustainability
  • Diversity.
6. Benefits/Advantages
  • Enhances business relationships with clients

  • It encourages both professional and personal development.

  • Ability to have positive impact in the society.

  • Cost Reduction

  • Employee retention.

7. Critics/Disadvantages
  • Larger companies take advantage as that costs would be included in cost of production, which inturn burdens the end customers.

  • Costs and expenses are needed for CSR Committee to set-up.

8. Disclosure
  • Disclosure of the reason for not spending the said amount is a compliance of the provisions. Non-disclosure, or absence of the details about the CSR policy and its implementation in the Boards’ report would attract penalties
9. Penalty for Contravention
  • For Companies: Failure to comply fine of not less than 50,000 which may extend to 25 lakhs.

  •  For Officer-in-default:  Imprisonment upto 3 years or with fine of not less than 50,000 which may extend upto 25 lakhs for every officer-in-default or with both.


Krishi Kalyan Cess – Have you treated it correctly? Applicability and impact on pending invoices/ payments as on June 1, 2016

Krishi Kalyan Cess 1 Krishi Kalyan Cess 5

As you are aware that the effective rate of service tax has increased from 14.5% to 15% with the introduction of KrishiKalyan Cess (“KKC”) of 0.5% with effect from June 1, 2016.  In this regard, it is to be noted that if the payment is received on or after June 1, 2016, then the service provider will be liable to pay KKC to the Government as per Point of Taxation Rules, 2011.

The applicability of KKC, being a new levy for the first time on services, is governed as per Rule 5 of Point of Taxation Rule, 2011.  The explanation thereto. Rule 5 of Point of Taxation Rules, 2011 is as under:-

“Where a service is taxed for the first time, then –

  1. a) no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable;
  1. b) no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within fourteen days of the date when the service is taxed for the first time.

Explanation 1 – This rule shall apply mutatis mutandis in case of new levy on services.

Explanation 2 – New levy or tax shall be payable on all the cases other than specified above.”

Krishi Kalyan Cess 2 Krishi Kalyan Cess 3

In lights of the above applicable provisions of the law and explanation thereto, any invoice which has been issued prior to 01-June-2016 for which the payment are made on or after 01-June-2016 shall attract the new levy KKC.

Krishi Kalyan Cess 4To illustrate, if an invoice is issued on May 30, 2016 with a service tax rate of 14.5% and the payment is received on June 2, 2016, then the service provider would be liable to pay KKC to the Government i.e. the effective rate would be 15%.  He will be required to either collect it from his customer or pay from his pocket.

We hereby request and advise you to make the payment on or before 31-May-2016 against invoice already issued. Without prejudice to the above, in the event, wherein, any invoice which remains outstanding as on 31-May-2016, it is necessary that an additional invoice be issued for levy of new tax KKC on such outstanding amount.

It may be further noted that the additional levy of KKC on such outstanding amount shall be eligible for CENVAT credit.

It is to be noted that if such payment is not made, then the service provider will be liable to pay interest and penalty on KKC not deposited based on the above provision.

In case of any clarifications you may contact us on or on +91-70222-51221.

Article Credit – CA Nitin Nahar & CA Mohit Bajaj