Corporate social responsibility

THE HANS INDIA |   Jun 15,2017 , 04:45 AM IST


For the first time, the Central government is planning to conduct a study for assessing the impact of corporate social responsibility projects undertaken by various public sector firms.  The study, to be carried out by the Department of Public Enterprises, will cover 134 central public sector enterprises.  

Under the Companies Act, 2013, a certain class of profitable entities are required to shell out at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities in a particular fiscal.  In case of non-spending, the company concerned has to clarify for the same 
to the ministry.  The norms came into effect from April 1, 2014. 

Companies Act 2013 (Companies Act) has introduced several new provisions which change the face of Indian corporate business. One of such new provisions is Corporate Social Responsibility (CSR). The concept of CSR rests on the ideology of give and take. Companies take resources in the form of raw materials, human resources etc from the society.

By performing the task of CSR activities, the companies are giving something back to the society. Section 135 of the Companies Act provides the threshold limit for applicability of the CSR to a Company i.e. (a) net worth of the company to be Rs 500 crore or more; (b) turnover of the company to be Rs 1000 crore or more; (c) net profit of the company to be Rs 5 crore or more.

Further as per the CSR Rules, the provisions of CSR are not only applicable to Indian companies, but also applicable to branch and project offices of a foreign company in India,  writes The CSR activities will have to be within India, and the new rules will also apply to foreign companies registered here.

However, funds given to political parties and the money spent for the benefit of the company’s own employees (and their families) will not count as CSR. The CSR policy of a company should also specify that “surplus arising out of the CSR projects or programmes or activities shall not form part of the business profit of a company.’’ A company can also carry out CSR works through a registered trust or society or a separate company.

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