With reference to Corporate Social Responsibility (CSR), which of the statements is/are correct?
- (1) Companies Act 2014, introduces mandatory CSR.
- (2) Companies covered under this will have to spend at least one percent of their annual net profit on the activities under CSR.
Select the correct answer using the codes given below:
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
Explanation: Companies Act 2013, introduced mandatory CSR. Hence Statement 1 NOT is Correct. The Act encourages companies to spend 2% of their average net profit in the previous three years on CSR activities. Hence Statement 2 is Not Correct.
“Corporate Social Responsibility” in general can be referred to as a corporate initiative to assess and take responsibility for the company’s effects on the environment and impact on social welfare.
In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013. The CSR provisions within the Act are applicable to companies with an annual turnover of 1,000 crores and more, a net worth of Rs. 500 crores and more, or a net profit of Rs. 5 crores and more.