CSR Expenditure of Company fulfiled through Trust

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This discussion explores whether a company can fulfil its Corporate Social Responsibility (CSR) obligations by donating funds to a public trust it established, which then donates to another trust. The core question revolves around the legality and auditability of such a structure, particularly concerning the utilisation of CSR funds within the financial year and auditor's objections. Guidance is sought on the specific laws and rules governing this practice.

Vipul Acharya

Vipul Acharya (Querist)

22 September 2021 Can a Trust created by company for CSR Funding, donate to another trust for compliance of Company's CSR Liability

We are a manufacturer of batteries, we have created a public trust for CSR Compliances through Trust and for this we have donated Rs. 1 Crores to compnay trust, but till date no activities done.

Now we are planning that, company's trust should donate the same 1 crores to another trust for CSR compliance

Kindly guide the feasibility along with rules and laws

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

23 September 2021 Yes, such donation allowed for CSR compliance.

Vipul Acharya

Vipul Acharya (Querist)

23 September 2021 Dear Sir,

Can you please share laws or rules regarding same, as per our auditor amount given to second trust will not be allowable as application of CSR fund and even if amount given to company trust, then trust will have to utilise the funds within the FY,

kindly help

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

23 September 2021 See the link.

https://taxguru.in/company-law/trusts-eligible-receive-csr.html

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