Corporate Social Responsibility (CSR) Policy Amendment Rules, 2022
Recently the Ministry of Corporate Affairs (MCA) has issued the Companies Corporate Social Responsibility (CSR Policy) Amendment Rules, 2022.
These rules have made amendments in the Companies Act 2013 to the Companies (CSR Policy) Rules, 2014.
Under the Companies Act, companies that meet certain conditions are required to spend 2% of their average net profit on CSR activities.
CSR expenditure has been made mandatory for the following companies:
- having a net worth of Rs 500 crore or more during any financial year, or
- whose turnover is Rs.1,000 crore or more or,
- Those who have made a net profit of Rs 5 crore or more during the last three consecutive financial years.
Corporate Social Responsibility:
- Meaning: Corporate Social Responsibility (CSR) is defined as a management concept whereby companies integrate social and environmental concerns with their business partners with their stakeholders.
- Evaluation of direct and indirect changes to be made by CSR projects on the target beneficiaries and the environment around them is called ‘Impact Assessment Studies’.
- The concept of CSR in India is regulated under section 135 of the Companies Act, 2013
Key provisions of the new rules –
- Companies are required to utilize the unspent CSR account amount within three financial years. Also, a CSR committee will also have to be constituted to oversee its implementation.
- Expenditure for Social Impact Assessment (SIA) can be included in CSR expenditure.
- However, this expenditure should not exceed 5% of the total CSR expenditure or Rs 50 lakh (whichever is higher) in a financial year. Earlier, it was 5% of the total CSR expenditure or Rs 50 lakh (whichever is less).
- SIA is mandatory for businesses with a CSR budget of Rs 10 crore or more, and all projects with an outlay of Rs 1 crore or more.
- The new annual report on CSR activities will be included in the Board’s report.
- Companies are required to mention the CSR committee composition and CSR policy on their website.
Source- The Hindu