Whether contribution to the corpus of an entity is an admissible CSR expenditure?

No, contribution to the corpus of an entity is not an admissible CSR expenditure. This was clarified by the Ministry of Corporate Affairs (MCA) in a General Circular No. 14/2021 dated 22nd January, 2021. The Circular states that "contribution to the corpus of any entity shall not be admissible as CSR expenditure".

The MCA has taken this decision in order to prevent companies from circumventing the CSR regulations. Previously, companies could contribute to the corpus of a trust or foundation and then claim that this was an admissible CSR expenditure. However, the MCA has now clarified that this is not the case.

Companies are now required to spend their CSR funds on actual projects and activities that benefit society. This will ensure that CSR funds are used in a more effective and transparent manner.

Here are some of the reasons why contribution to the corpus of an entity is not an admissible CSR expenditure:

• It is not clear how the funds in the corpus will be used.
• There is no guarantee that the funds will be used for CSR purposes.
• The company does not have any control over how the funds are used.

As a result, the MCA has decided that contribution to the corpus of an entity is not an admissible CSR expenditure. Companies are now required to spend their CSR funds on actual projects and activities that benefit society.