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 Page 1

Jndttrlztncornetaxer

① This standard is to Taxes

applicable accounting for Broome .

Such Gnome Tax can be domestic or 9N teondbicnal and include

treatment of Dividend Distribution Tax CDDT

) .

* DDT not be but IndAs-12 specifies it treatment

may applicable now, .

② Meaning of Terms
Accounting Profit PBT
* ✗ ✗✗ → means

I Tax Adjustment ¥

Taxable profit ,
XXX → Means Total Name Under Tax Laws .

✗✗× → " Tax on Taxable Profit

Current Tax
.

Deferred Tax ✗✗ ✗ → " Tax on

Temporary Differences
Tax Expense Fxx →
Aggregate of current and Deferred Tax
-

*
Deferred Tax can be recognised as Deferred Tax Asset or Deferred Tax liabilities
4- DTA is amount of future deduction in taxable Profit , when asset

or liab.is Realised / settled .

* DTL is amount
of future tax liability that will arise when asset

or
liability is settled .

* Tax base means value attributed

by tax laws .
91-1's calculated
by
Tax Returns
Sefer are to .

* MAT credit is also treated DTA 9- is Recognised

as as
follows
.

DTA -
MAT credit Alo Do

To Tax Expense

( Being MAT credit Recorded in books)

 Page 2

③ TaxBaseofAsset_

against taxable Profits that

This is Amt deductible
from
•
tax will

flow to
entity when entity recovers
carrying
Amount
of Asset .

If those economic Benefits are not taxable , then Tax Base = Carrying Ant .

•
Tax Base anteceded settlementor Realisation
may get affected by Manner
of .

Sometimes Amt
of Asset may be Nil but still it has Tax Base
carrying
0

like
Preliminary Expenses ( These are
having Nil CA but Tax Base is

not nil)

Note Tax Base later

:

of liability → Discussed .

⑨ •
Current Tax is Tax calculated on Taxable Profits ,
which will be

paid to tax authorities .

9- can be Current Tax Asset or current Tax

liability .

•
Current Tax is NIT financial asset
/ liability . 91 is shown
-

as

current Asset or current Liability funder provision) .

Current Tax is tax rates that have been

measured
using enacted or
•

substantively enacted
by reporting date .

Any annouameut
having
certain
effect ,
are also adjusted .

•
Current Tax Asset and current Tax liability in Balancesheet
are
offset
if it is
Enger t and Entity intends to settle it

both Asset and liability

on net Basis .

Generally when are

law it that set is allowed

under same
,
is considered off .

Current Tax Nome Tax Charge Penalties finer interest

•
arisen
from , ,

charged under Tax laws 97

may be of current
year or Earlier Yean
.
 if not provided easier .
Page 3

③ Process of calculation
of Deferred Tax

Tax
Carrying Amt Base
Temporary Difference
-
=

Such
Temporary Diff is multiplied by Rate of Tax to calculate

D. Tax .
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Lecture - 1
Chapter 17 – Corporate Social responsibility”

Provisions related with CSR are covered by

(a) Sec. 135 of Companies Act, 2013
(b) Schedule VII of Companies Act, 2013
(c) Companies (CSR Policy) Rules, 2014

(1) Applicability of CSR Provisions: Rule 3 of Companies (CSR Policy) Rules, 2014

Every Company* including its holding or subsidiary

and
a foreign company defined u/s 2(42) having its branch office or
project office in India

which fulfils the Criteria specified u/s 135(1)

shall comply with the provisions of Sec. 135 of the Act and Rules

* Every company implies that CSR provisions are applicable to Private, Public,
Government, Non-Govt. Sec. 8 Company, etc.

DO Practice – Q. No. 1 and 2 of Study Material

(2) Requirement of CSR Committee: Sec. 135(1) of Companies Act, 2013

- Every Company having – Net worth of > ₹ 500 Cr.

or
- Turnover > ₹ 1000 Cr. during immediate
or preceding financial year
- Net Profit > ₹ 5 Cr.
shall constitute a CSR committee of the Board.

17.1
Corporate Social Responsibility (For Final – Financial Reporting) Chapter 17
- CSR Committee shall consist of > 3 directors, out of which at least one director shall
be an Independent director. (I.D.)

- However, if a company is not required to appoint an I.D. u/s 149(4) of the Companies
Act,2013, it shall have in its CSR Committee > 2 directors.

- Sec. 135(9): Where the amount to be spent by a Company u/s 135(5) is < ₹ 50 lacs,

requirement for consitution of CSR committee u/s 135(1) shall not be

applicable and the functions of such committee shall be discharged by

the BOD of such company.

Do Practice – Q. No. 3 of Study Material, May 2018 (Exam), May 2019 (RTP),

April 2019 (MTP), Oct. 2019 (MTP), May 2020 (MTP), Nov. 2020 (Exam)

(3) Role of CSR Committee: Sec. 135(3) of Companies Act, 2013

(a) Formulate and Recommend to Board, a CSR Policy, which shall indicate the activities

to be undertaken by the company in areas or subject, specified in Schedule VII.

(b) Recommend the amount of expenditure to be incurred on the activities referred above.

(c) Monitor the CSR Policy of the company from time to time.

(4) Role of Board:

Sec. 135(2): Board’s Report u/s 134(3) shall disclose composition of CSR committee.

Sec. 135(4): - Board shall approve the CSR Policy, recommended by CSR committee.

- Board shall disclose the contents of such policy in its report and place it

on company's website, if any.

Rule 9: The Board of Directors of the Company shall mandatorily disclose

the composition of the CSR Committee, and CSR Policy and

Projects approved by the Board on their website, if any, for

public access.

17.2
Chapter 17 Corporate Social Responsibility (For Final – Financial Reporting)

Sec. 135(5):

- Board shall ensure that company spends, in every financial year, atleast 2% of the

average net profits of the company

made during the 3 immediately preceding financial years

or, where the company has not completed the period of 3 financial years since its

incorporation, during such immediately preceding financial years

in pursuance of its CSR Policy.

- Company shall give preference to the local area and areas around it Where it operates,

for spending the amount earmarked for CSR activities.

- If the company fails to spend such amount, Board, shall in its report, specify the

reasons for not spending the amount

and unless the unspent amount relates to any ongoing project, transfer such unspent

amount to a fund specified in Schedule VII, within a period of 6 months from expiry of

financial year.

Note: If the company spends an amount in excess of the requirements then if may set off

such excess amount against the requirement to spend for such number of succeeding

financial year and in such manner as may be prescribed.

Rule 7(3): Where a company spends an amount in excess of requirement provided

u/s 135(5), such excess amount may be set off against the requirement

to spend u/s 135(5) up to immediate succeeding 3 financial years.

DO Practice – Question No. 4, 6 and 7 of Study Material, Q. No. 3 of Back Exercise

Nov. 2018 (Exam), Jan. 2021 (Exam)

17.3
Corporate Social Responsibility (For Final – Financial Reporting) Chapter 17
Sec. 135(6):

- Any amount remaining unspent u/s 135(5), pursuant to any ongoing project, fulfilling

such conditions as may be prescribed, undertaken by a company in pursuance of its CSR

Policy, shall be transferred by the company within a period of 30 days from the end of

the financial year to a special account to be opened by the company in that behalf for

that financial year in any scheduled bank to be called the Unspent CSR Account, and

such amount shall be spent by the company in pursuance of its obligation towards the

CSR Policy within a period of 3 financial years from the date of such transfer, failing

which, the company shall transfer the same to a Fund specified in Schedule VII, within

a period of 30 days from the date of completion of the third financial year.

(5) CSR Activities:

Rule 3(2): Every company which ceases to be a company covered u/s 135(1) for 3

consecutive financial years shall not be required to:

(a) constitute a CSR Committee; and

(b) comply with the provisions contained in Sec. 135, till such time it meets

criteria specified in Sec. 135(1).

DO Practice – Q. No. 2 (Back Exercise) of Study Material

Rule 4:

- The Board shall ensure that the CSR activities are undertaken by the company itself or

through:

(a) a company established u/s 8 of the Act, or a registered public trust or a

registered society, registered u/s 12A and 80 G of the Income Tax Act, 1961,

established by the company, either singly or along with any other company, or

(b) a company established u/s 8 of the Act or a registered trust or a registered

society, established by the Central Government or State Government; or

(c) any entity established under an Act of Parliament or a State legislature; or

(d) a company established u/s 8 of the Act, or a registered public trust or a

registered society, registered u/s 12A and 80G of the Income Tax Act, 1961,

and having an established track record of at least three years in undertaking

similar activities.

17.4
Chapter 17 Corporate Social Responsibility (For Final – Financial Reporting)
- A company may also collaborate with other companies for undertaking projects or

programmes or CSR activities in such a manner that the CSR committees of respective

companies are in a position to report separately on such projects or programmes in

accordance with these rules.

- The Board of a company shall satisfy itself that the funds so disbursed have been

utilised for the purposes and in the manner as approved by it and the CFO or the

person responsible for financial management shall certify to the effect.

- In case of ongoing project, the Board of a Company shall monitor the implementation of

the project with reference to the approved timelines and year-wise allocation and shall

be competent to make modifications, if any, for smooth implementation of the project

within the overall permissible time period.

(6) Activities included in CSR Policy Activities: [Schedule VII]

Examples: - Eradicating hunger, poverty and malnutrition, etc.

- Promoting education, including special education, etc.

- Promoting gender equality, empowering women, etc.

- Ensuring Environmental sustainability, etc.

- Protection of National heritage, etc.

- Contribution to Swach Bharat Kosh, Clean Ganga Fund, PM care Fund, etc.

(7) Miscellaneous:

(a) Penalty for non – compliance of Sec. 135:

If a company defaults in complying with Sec. 135(5) & 135(6), the company shall

be liable to a penalty of

- twice the amount required to be transferred by the company to the Fund

specified in Schedule VII or the Unspent CSR Account, as the case may be,

or

- ₹ 1 crore,

whichever is less.

17.5
Corporate Social Responsibility (For Final – Financial Reporting) Chapter 17

In addition to it, every officer of the company who is in default shall be liable to a

penalty

- 1/10th of the amount required to be transferred by the company to such Fund

specified in Schedule VII, or the Unspent CSR Account, as the case may be,

or

- ₹ 2 lakh,

whichever is less.

(b) CSR Expenditure – Deduction under Income Tax Law:

- CSR Expenditure, cannot be allowed as deduction for computing taxable income of

company as amount spent is towards application of income.

- CSR expenditure of nature specified u/s 30 to 36 of Income Tax Act shall be

allowed as deduction subject to fulfilment of conditions specified in respective

sections.

- Deduction u/s 37(1) shall not be allowed.

DO Practice - Q. No. 9 of Study Material

(c) Meaning of CSR under Rule 2(1)(d):

“Corporate Social Responsibility (CSR)” means the activities undertaken by a Company in

pursuance of its statutory obligation laid down in Sec. 135 in accordance with the

provisions contained in these rules, but shall not include the following, namely:

(i) activities undertaken in pursuance of normal course of business of the company:

Exception: Companies engaged in R & D activities of new vaccine, drugs &

medical devices in their normal course of business may undertake R & D activity

of new vaccine, drugs and medical devices related to COVID-19 for financial

years 2020-21, 2021-22 and 2022-23.

(ii) any activity undertaken by the company outside India except for training of

Indian sports personnel representing any State or Union territory at national

level or India at international level;

17.6
Chapter 17 Corporate Social Responsibility (For Final – Financial Reporting)
(iii) contribution of any amount directly or indirectly to any political party u/s 182;

(iv) activities benefitting employees of the company;

(v) activities supported by the companies on sponsorship basis for deriving marketing

benefits for its products or services;

(vi) activities carried out for fulfilment of any other statutory obligations under any

law in force in India;

DO Practice - Q. No. 5 and 8 of Study Material

(d) Accounting for CSR Transactions:

(i) Revenue Expenses:

- As per General Instruction for preparation of Statement of Profit and

Loss under Schedule III, in case of companies covered u/s 135, the

amount of expenditure incurred on CSR activities shall be disclosed by

way of Notes to Statement of P & L.

- The notes shall also disclose the details with regard to expenditure

incurred in construction or acquisition of a capital asset under a CSR

Project.

(ii) Provision for unspent amount:

(a) Other than Ongoing Project [Sec. 135(5)]

A provision for the liability for the amount representing the extent to

which the amount is to be transferred, need to be recognised in the

financial statements.

CSR Expenditure A/c Dr.

To CSR to be deposited in Fund

(b) Ongoing projects [Sec. 135(6)]

A provision for the liability for the amount representing the extent to

which the amount is to be transferred within 30 days of end of financial

year, need to be recognised in the financial statements.

CSR Expenditure A/c Dr.

To CSR to be spent on ongoing projects

17.7
Corporate Social Responsibility (For Final – Financial Reporting) Chapter 17
(c) Creation or Acquisition of Capital Assets: [Rule 7(4)]

CSR Amount may be spent by a company for creation or acquisition of

capital asset which shall be held by:

(i) a company established u/s 8 of the Act or a registered public

trust or registered society having charitable objects and CSR

Registration no.

(ii) Beneficiaries of the said CSR project, in the form of self-help

groups, collectives, entities; or

(iii) a public authority.

DO Practice - Q. No. 1 (Back Exercise) of Study Material

17.8
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