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?

With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements: 1. CSR rules specify that expenditures … Which of the statements given above is/are correct? — UPSC Prelims 2024 Answer & Explanation

General Studies (Uncategorized)2024

With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements:

CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities.
CSR rules do not specify minimum spending on CSR activities.

Which of the statements given above is/are correct?

Explanation

The correct option is 1 only. Under the Companies Act, 2013, CSR activities are defined as those that contribute to social welfare and do not benefit the company or its employees directly. This ensures that CSR funds are directed towards broader societal benefits rather than enhancing the company's operations or employee well-being. On the other hand, the CSR rules set a minimum threshold for spending, specifically requiring companies to allocate 2% of their average net profit over the preceding three years towards CSR activities, countering statement 2. This delineation underscores the intent of CSR as a mechanism for corporate accountability and societal contribution rather than mere corporate self-interest.

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