From Charity To Tax: Has Mandatory CSR Become A Tool To Displace State Welfare Duties?

Aayush Ranjan; Mahima Sharma

From Charity To Tax: Has Mandatory CSR Become A Tool To Displace State Welfare Duties?

Author(s)	Mr. Aayush Ranjan, Ms. Mahima Sharma
Country	India
Abstract	India was the first country in the entire world to statutorily mandate Corporate Social Responsibility (CSR) with the Section 135 of the Companies Act, 2013. The intention of the legislature was to promote the voluntary corporate philanthropy and the Gandhian philosophy of trusteeship. However, with time the intention was taking a devastating shift with the Companies (Amendment) Acts of 2019 and 2020. With the introduction of penalties for non-compliance, mandating the transfer of unspent CSR amounts to escrow accounts, and ultimately requiring the forfeiture of these funds to government-specified conduits under Schedule VII (such as the PM CARES Fund), the State has effectively shifted a moral corporate duty into a compulsory "shadow tax." This research paper critically focuses the constitutional and socio-economic implications of this shift. The core objective is that the current mandatory CSR regime enabling the government to transfer its own duty on others, the duty which is mentioned as the Directive Principles of State Policy (Part IV of the Constitution), to the private sector. The past data indicates a disproportionate distribution of the CSR funds, companies usually invest in the states where they operate for while the backward states get neglected.
Keywords	Corporate Social Responsibility, Section 135 Companies Act 2013, Schedule VII, Shadow Tax, Directive Principles of State Policy, Corporate Governance, PM CARES.
Published In	Volume 8, Issue 5, September-October 2026
Published On	2026-10-11

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From Charity To Tax: Has Mandatory CSR Become A Tool To Displace State Welfare Duties?

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