Q. 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?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Correct answer: (a) 1 only
Question from UPSC Prelims 2024 GS Paper
Explanation:
Statement 1: CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities.
This statement is correct. The CSR rules in India, specifically Rule 2(1)(d)(iv) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, state that “activities benefitting employees of the company as defined in clause (k) of section 2 of the Code on Wages, 2019 (29 of 2019)” shall not be considered as CSR activities.
Source: CSR Benefiting Employees (CSR) Series – Part I (taxguru.in)
Statement 2: CSR rules do not specify minimum spending on CSR activities.
This statement is incorrect. India’s CSR rules do specify minimum spending requirements for eligible companies. According to the Companies Act, 2013, companies meeting certain financial thresholds are required to spend at least 2% of their average net profit for the preceding three financial years on CSR activities.
Therefore, the correct answer is (a) 1 only.