Why in the News?
In 2023-24, India’s listed companies spent Rs 17,967 crore on Corporate Social Responsibility (CSR), 16% higher than Rs 15,524 crore in 2022-23.
As per the PRIME Database report, this increase was due to an 18% rise in the companies’ net profits.
About Corporate Social Responsibility (CSR) and Obligations Under It
- CSR is a self-regulating business model through which companies become socially accountable to themselves, stakeholders, and the public.
- It includes initiatives that assess and take responsibility for the company’s social and environmental impact.
- India is the first country to mandate CSR spending w.e.f. April 1, 2014, through Section 135 of the Companies Act, 2013.
- It provides a structured framework for CSR activities.
- CSR provisions apply to companies that, in the preceding financial year, have:
- Net worth ≥ ₹500 crore, or
- Turnover ≥ ₹1,000 crore, or
- Net profit ≥ ₹5 crore
- CSR Spending Obligation:
- Companies must spend at least 2% of their average net profits of the last 3 financial years on CSR.
- Newly incorporated companies should calculate it based on profits of previous years.
- Eligible CSR Activities:
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- Eradicating hunger and poverty
- Promoting education, gender equality
- Combating diseases (e.g., HIV/AIDS)
- Environmental sustainability
- Contributions to relief funds (e.g., PM CARES, PM Relief Fund)
- Welfare of disadvantaged groups
- If CSR spend > ₹50 lakh, companies must constitute a CSR committee with at least three board members, one being independent.
| [UPSC 2024] Consider the following statements with reference to Corporate Social Responsibility (CSR) rules in India:
1. CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities. 2. CSR rules do not specify minimum spending on CSR activities. Which of the statements given above is/are correct? Options: (a) 1 only* (b) 2 only (c) Both 1 and 2 (d) Neither 1 or 2 |
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