The much-awaited rules for the new ‘corporate social responsibility’ (CSR) regime were notified on Thursday, under which companies with sizable businesses would need to spend a minimum 2 per cent of net profit for the benefit of the society.
i.The CSR activities will have to be within India, and the new rules will also apply to foreign companies registered here.
ii.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.
Listing out the permitted CSR activities, the government said that they needed to be undertaken as per approval of the company’s board in accordance with its CSR Policy and the decision of its CSR Committee.
iii.The CSR rules will take effect from April 1, as part of the new Companies Act.
iv.They will apply to companies with at least Rs 5 crore net profit, or Rs.1,000 crore turnover or Rs.500 crore net worth.
v. Such companies will need to spend 2 per cent of their three-year average annual net profit on CSR activities in each financial year, beginning the next fiscal, 2014-15.
vi. A company can also carry out CSR works through a registered trust or society or a separate company.
vii. As per the rules, a company may also collaborate with other companies for CSR activities, provided they have to separately report about spending on such projects programmes.
Among other activities, livelihood enhancement and rural development projects, promoting preventive health care and sanitation as well as making safe drinking water available would be considered as CSR activities.
For details please see attached notification/rule.