Govt yields on 2%,CSR up to firms

Companies need not necessarily spend 2 per cent of their profits towards CSR.

Companies need not necessarily spend 2 per cent of their profits towards corporate social responsibility (CSR). In a move that will warm the cockles of India Incs heart,the Ministry of Corporate Affairs plans to subtly ask companies to endeavour and spend a part of their profits for CSR.

The Companies Bill,2009,had proposed that firms mandatorily earmark 2 per cent of their average profits for CSR,and make a disclosure to shareholders.

After prolonged discussions with industry chambers and CEOs,the ministry has dropped the mandatory clause.

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Now firms with net worth of Rs 500 crore or turnover of Rs 1,000 crore or net profit of Rs 5 crore or more would formulate a CSR policy for spending at least 2 per cent of the net profits. However,the spending would be voluntary,with companies giving reasons in their annual report if it was less.

The amount to be spent by them on CSR will be decided by shareholders, a ministry source said. Simultaneously,the ministry will ensure that the money reaches areas which need the same.

State-owned undertakings,however,will have to mandatorily set aside a fixed percentage of their profits.

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