CSR Rules

Highlights of the mandatory CSR provision in the Companies Act, 2013

On February 27, 2014, the Ministry of Corporate Affairs notified the rules for Section 135 of the Companies Act 2013 which pertains to the mandatory CSR provision for companies. The CSR provision will come into effect from April 1, 2014.

As per the provisions of Section 135, a company with a turnover of INR 1,000 crore or more or of a net-worth of INR 500 crore or more or net profit of INR 5 crore or more is required to spend at least 2% of its average net profit of the past three years on CSR activities. Further, the Act provides that if, for any reason, a company is unable to spend 2% of their average net profit on CSR, they are required to explain the reason for not doing the same.

In order to provide clarity on the rules, Samhita Social Ventures has prepared a brief document highlighting the workings and implications of the CSR provision. You can view the document here.

For a more detailed interpretation of the CSR provision by Samhita’s Managing Director Krishnan Neelakantan, click here.