With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements:
1.

Question

With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements:
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?

Accepted Answer

The Companies Act, 2013, mandates that CSR activities should not be undertaken in the ordinary course of business and should not exclusively benefit employees. Therefore, expenditures that primarily benefit the company directly or its employees are disqualified. While the Act mandates companies above a certain threshold to spend 2% of their average net profits on CSR, it does not specify a minimum spending amount in terms of absolute value, but rather as a percentage of profits.