Srija Choudhury
in Corporate Law
Asked December 22, 2014

Corporate social responsibility

  • 1 Answer

What is the scope of corporate social responsibility in India ?

Answer 1

Default avatar
Ayushi Singhal
Corporate Social Responsibility (Hereinafter “CSR”) is the responsibility of the corporate world towards the society at large. Section 135 of The Indian Companies Act, 2013 lays down the scope of Corporate Social Responsibility in India. It requires companies having; 1. a net worth of rupees five hundred crore or more, or; 2. a turnover of rupees one thousand crore or more, or; 3. a net profit of rupees five crore or more during any financial year; to form a CSR Committee. This committee should consist of at least three directors, including an independent director and should formulate and monitor the CSR policy of the company. It should also ensure that every financial year, the company spends at least 2% of its average net profits made during the preceding three financial years towards its CSR activities. This involves spending on anything from education and health to environment-protection related activities. However it does not include, “1. Business run in the normal course. 2. Outside the territory of the India or abroad. 3. For the welfare of the employees and their families. 4. Political party contribution of any amount directly and indirectly as defined u/s 182 of the Act. ” The non-compliance with the minimum expenditure to be made on CSR needs to be disclosed by the board in the Annual Report to the shareholders, along with reasons, which should also be made available on the Company’s Website. This report must also contain particulars on Overview of CSR Policy, Composition of the Committee, Avg. Net Profit, prescribed expenditure and details of its spending, reason in case of failure etc.
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