UPSC Previous Year Question | Prelims GS | 2024

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?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer

Correct Answer

1 only

Explanation

Statement 1 is correct: activities that benefit the company itself or its employees in ways excluded by the CSR framework are not treated as eligible CSR activities. Statement 2 is incorrect. Under Section 135 of the Companies Act, qualifying companies are required to spend at least 2% of their average net profits of the immediately preceding three financial years on CSR, subject to the statutory provisions. Thus, CSR rules do specify a minimum spending requirement.

Topics: corporate governance, corporate social responsibility, csr eligibility and spending rules, indian economy