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

CSR in India is governed by Section 135 of the Companies Act, 2013 read with the Companies (CSR Policy) Rules, 2014.

1. **Statement 1 is correct.** The CSR Rules explicitly exclude from 'CSR activities' any activity that benefits only the employees of the company and their families, as well as activities undertaken in the normal course of business of the company. Spends that directly benefit the company or its employees do not qualify as CSR.

2. **Statement 2 is incorrect.** Section 135 prescribes a clear minimum: every eligible company must spend at least **2% of the average net profits** of the immediately preceding three financial years on CSR activities. So a minimum spend is specified.

Hence, only statement 1 is correct.

Answer

1 only

Answer

2 only

Answer

Both 1 and 2

Answer

Neither 1 nor 2

Explanation

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