Emphasising that the objective of CSR is to share the government’s burden in providing social services, the Budget said, "if such expenses are allowed as tax deduction, this  would result in subsidising of around one-third of such expenses by the government by way of tax expenditure".   

As the CSR expenditure, being an application of income is not incurred for the purposes of carrying on business, such expenditures cannot be allowed under existing provisionsof section 37 of the Income Tax Act, as per the Budget.    

Under this section, deduction for any expenditure, which is not mentioned specifically in section 30 to section 36 of the Act, shall be allowed if the same is incurred wholly and exclusively for the purposes of carrying on business or profession. Referring to the Budget announcement, Tiwari said, "it is more of a clarification in nature". CSR norms are applicable for companies having minimum net worth of 500 crore or turnover of 1,000 crore or net profit of 5 crore in a financial year.   

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