CSR spending mandatory for public sector companies

The gov­ern­ment has made it manda­to­ry for all prof­it-mak­ing cen­tral pub­lic sec­tor com­pa­nies to spend mon­ey on Cor­po­rate Social Respon­si­bil­i­ty activities.

The Depart­ment of Pub­lic Enter­pris­es (DPE) has come out with the revised guide­lines fol­low­ing the new Com­pa­nies Act mak­ing social wel­fare spend­ing com­pul­so­ry for cer­tain class of prof­itable cor­po­rates manda­to­ry. In com­par­i­son with pro­vi­sions under the Com­pa­nies Act, 2013, the lat­est DPE norms are more strict since it would be applic­a­ble on all prof­it-mak­ing cen­tral pub­lic sec­tor enterprises.

As per the com­pa­nies law, com­pa­nies hav­ing at least Rs 5 crore net prof­it, or Rs 1,000 crore turnover or Rs 500 crore net worth are required to shell out at least two per cent of their three- year annu­al aver­age net prof­it towards CSR activities.

Accord­ing to revised DPE guide­lines, issued on Octo­ber 21, “it is manda­to­ry for all prof­it-mak­ing Cen­tral Pub­lic Sec­tor Com­pa­nies (CPSE) to under­take CSR activ­i­ties as per pro­vi­sions of the Act and CSR rules”.  These guide­lines are effec­tive from April 1. CPSE that do not meet the eli­gi­bil­i­ty cri­te­ria under the Com­pa­nies Act but have made prof­it in the pre­ced­ing year are now required to spend “at least two per cent of the prof­it made in the pre­ced­ing year on CSR activities”.

Besides, the pub­lic sec­tor enti­ties are required to car­ry for­ward the unspent CSR funds to the next year.

Down­load Guide­line on CSR by DPE