If there is any unspent CSR amount we need to transfer to a separate Bank account. But do we have to create the provision and show it as CSR expense in the year in which it was to be spent?
3 Replies
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 22 April 2020
CSR expenses are provided at 2% on an average of three years profits. Fro example,
Year 1 PBT 10000
Year 2 PBT 20000
Year 3 PBT 10000
=40000/3*2%= 267₹ CSR expenditure. Some expenses are non tax deductible while others are. CSR Staff wages are included in this.
CSR expenses 167₹
CSR staff wages 100₹
To Payables 267₹
When expenses incurred are 167₹ only
Payables 167₹
To Cash a/c 167₹
The balance is transferred to profits back again as this past three years average PBT amount is deducted from current years PBT or reserves.
To Profit and loss 100₹
By gain (CSR activity) 100₹
This is because there is no clear accounting treatment available for money saved from CSR activity online.
No provision is required and over expenditures cannot be carried forward.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 22 April 2020
Hi, upon further googling about Section 135 of Companies act, 2013, I found out about
- Unspent Amount
- Contributed to Fund
- Marked for ongoing projects
- In case unspent CSR amount contributed to a fund specified in Schedule VII to the Act, the same would be treated as an expense for the year and charged to the statement of profit and loss.
- In case unspent CSR amount is related to Ongoing Projects, the same would be accounted based on the nature of such project.
So, if you contributed CSR money to a fund like Hurricane India, then it should be expensed. If you are undertaking a project to grow trees by yourself, the unspent money will be transferred back to CSR account.
CSR Activity 267₹
To unspent amount 100₹
To Cash 167₹
then debit as ‘By Cash 100₹’ in the CSR ledger credit balance rather than transferring it to profit and loss account.
To CSR reserve account 100₹
By Unspent amount 100₹
Sumit Bagra
(CA)
(74 Points)
Replied 31 July 2021
Use below link to view article on CSR https://drive.google.com/file/d/1vIICFfVaePwjcyd05SWXbyps7XNJIt9j/view?usp=sharing
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