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Govt. provides clarity on CSR activitiesunder Companies Act: PTI |Jun 19, 2014, 07.54 pm IST

Clarifying about the time period of three years for calculating CSR spend, the

ministry has said "any of the three preceding financial years" would be taken into

account for the purpose.

NEW DELHI:Providing more clarity on social welfare spending norms for

corporates, the government has said that "one off events" such as marathons and

sponsorships of television programmes would not considered towards CSR expense.

nder the new Companies !ct, certain class of profitable entities are reuired to

shell out at least two per cent of their three#year annual average net profit

towardsCorporate Social Responsibility$CSR% activities.

!sking stakeholders to "liberally" interpret the provisions in Schedule &''

$Companies !ct% ( that relates to CSR works ( the government has said that CSR

activities should be undertaken only in "pro)ect*programme" mode.

"+ne#off events such as marathons*awards*charitable

contribution*advertisement*sponsorships of & programmes etc would not be

ualified as part of CSR expenditure," the corporate affairs ministry has said.

!ccording to the ministry, salaries paid by the companies to regular CSR staff as well

as to volunteers $in proportion to the company-s time*hours spent specifically on

CSR% can be factored in as CSR expenditure.

Clarifying about the time period of three years for calculating CSR spend, the

ministry has said "any of the three preceding financial years" would be taken into

account for the purpose.

"xpenditure incurred by foreign holding company for CSR activities in 'ndia will

ualify as CSR spend of the 'ndian subsidiary if, the CSR expenditures are routed

through 'ndian subsidiaries and if the 'ndian subsidiary is reuired to do so as per

section /01 of the act," the ministry said in a circular.

2eanwhile, expenses incurred by companies for the fulfilment of any act*statute of

regulations would not be counted as CSR expenditure.

Contribution to corpus of a trust or society, among others, that are set up exclusively

for CSR activities would come under the social welfare spending ambit.

he ministry has also prepared an illustrative list of activities that can be classified as

CSR work. !mong them, "renewable energy pro)ects" would be considered as a CSR

activity provided that it is not part of the particular company-s business.

!s per the circular, the entries in Schedule &'' must be interpreted liberally so as to

capture the essence of the sub)ects enumerated.

CSR rul! "r "ppl#$"%l &' $'mp"n#! (")#n* "& l"!& R! 5 $r'r n&pr'+#&, 'r R! 1,000 $r'r &urn')r 'r R! 500 $r'r n& 'r&(.

'n case these entities are unable to spend the reuired amount, reasons for the same

have to be given to the ministry.

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