Cos will have 'latitude' in deciding on CSR activity: Govt

With social welfare spending set to become compulsory, the government today said companies will have 'latitude' to decide on Corporate Social Responsibility (CSR) activities.

 

"The companies will have latitude in designing project based CSR interventions within the framework of the Companies Act and the CSR policy of the company," Corporate Affairs Minister Sachin Pilot said in a written reply to the Rajya Sabha.

 

According to section 135 of the companies Act, certain class of entities have to spend at least 2% of their three-year average net profit towards CSR activities.

 

The ministry did not have any information about the official estimated expenditure to be incurred by corporate sector on the CSR activities as the relevant section of the companies law has not yet come into force.

 

As many as 98 sections of the Companies Act, 2013, which seeks to replace nearly 6-decade old law governing corporates, has been notified.

 

The new Companies Act is spread across 470 sections and would be implemented in a phased manner.

 

Implementation of a majority of the provisions of the Act, however, requires notification of relevant rules including cost records and audit mechanism, for which wider consultations have been held and draft rules have been put out for public comments, Pilot said.

 

"Draft rules would be examined in the light of such consultation and legally vetted for notification," he added.