Govt Imposes Rs 20 Cr Penalties On Companies

New Delhi : The government has imposed a total penalty of close to Rs 20 billion on various companies for non-compliance with CSR norms in the last three financial years. Under the company law, certain classes of profitable firms are required to spend at least 2 percent of their three-year average annual profits on Corporate Social Responsibility (CSR) activities in a financial year.

Every decision regarding CSR expenditure is a decision taken by the board of directors of a particular company, Finance and Corporate Affairs Minister Nirmala Sitharaman told the Rajya Sabha on Tuesday.

“A company and its board of directors get a call on how much to spend and where to spend it. Therefore, this is not a decision that we can enter and say, you have to spend this much here,” the minister said.

He was responding to comments by BJP member Bhim Singh on low CSR spending in Bihar during Question Hour.

Total CSR expenditure in Bihar in fiscal years 2021-22, 2022-23 and 2023-24 was Rs 680.91 billion by 854 companies.

Sitharaman told the Bihar member to continue meeting with different companies and impress them that money should be spent in Bihar.

The minister said that at best the ministry could only request to take up a few socially important projects in Bihar, but this was not “really legally defensible”.

Rajya Sabha Chairman CP Radhakrishnan intervened and asked whether the norms could be changed so that underdeveloped states could benefit from CSR funds.

Thereupon, Sitharaman said: “As a president, you said this. I can take this as a suggestion and see what I can do best.”

According to the written reply, a penalty of Rs 2.97 billion was imposed on six companies in 2022-23. In 2023-24, 11 companies were penalized Rs 3.32 billion and in 2024-25, 13 companies faced penalties of Rs 13.65 billion.

“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 provides for penalty in case the company fails to comply with its CSR obligation,” the reply said.

In case of default, both the company and the defaulting officer will be subject to penalties.

“When violation of CSR provisions is reported, action is taken against such non-compliant companies as per provisions of Companies Act, 2013 and rules framed accordingly after due scrutiny of records and following due process,” he said.