The government is likely to make slight changes in CSR provisions to clear the air on whether promoting healthcare can be considered as a social welfare spending activity by companies.
Under the new Companies Act, that comes into force today, most firms with sizeable business are required to shell out at least two per cent of their three year annual average net profit towards Corporate Social Responsibility (CSR) works.
The Ministry plans slight changes with regard to wordings in Schedule VII of Companies Act, 2013.
An official said that promoting healthcare by a company would be considered as a CSR activity.
The move is being planned in the wake of many representations made to the Ministry seeking clarity on promotion of health care in the context of CSR norms.
In Schedule VII, notified on February 27, it is mentioned that "eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water", among others would come under the CSR ambit.
To clear the air, the change planned is 'promoting healthcare, including preventive health care', according to the official.
As per the new companies law, CSR activities would have to be within India. They would apply to companies having at least Rs 5 crore net profit, or Rs 1,000 crore turnover or Rs 500 crore net worth.
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 2014-15 fiscal.
Livelihood enhancement and rural development projects, working towards protection of national heritage, art and culture, including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts would come under CSR ambit.
Various activities aimed at reducing inequalities faced by socially and economically backward groups have been included.
Measures for the benefit of armed forces veterans, war widows and their dependents, setting up homes and hostels for women and orphans, setting up of old age homes, day care centres and such other facilities for senior citizens would be considered as CSR work.
Other CSR activities include ensuring ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water.
