CORPORATE SOCIAL RESPONSIBILITY (CSR) FUNDS – ECONOMY
News: CSR
funds given to Valparai tribal settlement to build solid roof houses
What's in the news?
● Under
the Corporate Social Responsibility initiative, private companies handed over
₹14.86 lakh fund to Collector Kranthi Kumar Pati to construct solid roofs for
89 houses in four tribal settlements in the forest area in Valparai.
Corporate Social Responsibility (CSR):
● Corporate
Social Responsibility (CSR) is a concept that suggests that it is the responsibility of the corporations
operating within society to contribute towards economic, social and
environmental development that creates a positive impact on society at
large.
CSR and Companies Act, 2013:
● India
became the first country in the world to
make CSR compulsory.
● In
India, Corporate Social Responsibility has been made mandatory through the Companies Act, 2013.
● According
to the law, a company needs to spend at
least 2% of their average net profit made during the three immediately
preceding financial years for CSR activities.
● The
CSR activities in India should not be undertaken in the normal course of
business and must be with respect to any of the activities mentioned in
Schedule VII of the Act.
● CSR
expenditure is not eligible for
deduction under section the Income Tax Act and the expenditure on CSR does
not form part of business expenditure.
● The
Act also has penal provisions for corporations and individuals for failure to
abide by the norms.
● The
Act also provides that the company shall give preference to local areas and the areas around it where it
operates.
Who are under CSR Provisions?
● The
CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore and more, or
a net worth of Rs. 500 crore and more, or a net profit of Rs.5 crore and more.
● The
Act requires companies to set up a CSR committee which shall recommend a
Corporate Social Responsibility Policy to the Board of Directors and also
monitor the same from time to time.
● The
Act encourages companies to spend 2% of their average net profit in the
previous three years on CSR activities.
CSR Activities:
The
indicative activities, which can be undertaken by a company under CSR, have
cited under Schedule VII of the Act. The activities includes:
● Eradicating
extreme hunger and poverty.
● Promotion
of education, gender equality and empowering women.
● Combating
Human Immunodeficiency Virus, Acquired Immune Deficiency Syndrome and other
diseases.
● Ensuring
environmental sustainability.
● Contribution
to the Prime Minister's National Relief Fund or any other fund set up by the
Central Government for socio-economic development and relief and funds for the
welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes,
minorities and women etc.