Government Cracks Down on CSR Norm Violations with Penalties

The Indian government has levied penalties amounting to almost Rs 20 crore on several companies for failing to adhere to Corporate Social Responsibility (CSR) norms over the past three fiscal years. Under current legislation, a specific class of profitable companies must allocate no less than 2% of their average annual profit from the last three years towards CSR activities.

Finance Minister Nirmala Sitharaman addressed the Rajya Sabha, emphasizing that decisions on CSR spending are made by each company's board. She noted that while the ministry can suggest projects, they cannot mandate spending in any specific area. This clarifies the government's limited role in influencing CSR allocations despite requests, like those advocating for increased expenditures in states like Bihar.

Penalties were imposed on 30 companies across three years under Section 135 of the Companies Act, underscoring strict measures against CSR non-compliance. This includes Rs 2.97 crore in 2022-23, Rs 3.32 crore in 2023-24, and Rs 13.65 crore in 2024-25. These actions highlight the authorities' proactive stance towards enforcing CSR laws.