Corporate Social Responsibility (CSR) refers to the integration of social economic and environmental concerns in to the business operations of the companies and interactions with their stakeholders. In India, CSR projects are governed by Companies Act, 2013 and administered by the Ministry of Corporate Affairs, Government of India. It mandates the Companies to take up CSR projects on social welfare activities. CSR plays an important role in achieving the sustainable development goals (SDGs) and supports the socio-economic development of the country. Section 135 of the companies Act has laid down the criteria for determining the companies, who shall mandatorily implement CSR. It is further stipulated that the companies shall report the CSR activities in their annual report. CSR activities also support Government programmes such as Atmanirbhar Bharat, Sashakt Bharat and Swatch Bharat.
Companies with a net worth of Rs.500 crores, turnover of Rs. 1000 crores or net profit of Rs. 5 crore shall spend on CSR. The Director Board of the company shall ensure that it spends for Corporate Social Responsibility (CSR) in every financial year at least 2% of the average net profits of the company made during the three immediately preceding financial years or in case if the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years. If the company fails to spend such amount, the reasons thereof shall be reported in the annual report.
CSR fund for Public R&D
In September 2019, Government of India announced its decision to extend allow use of CSR funds for investments in publicly-funded incubators and R&D projects in science, technology and engineering in publicly funded Universities, IITs, national laboratories and autonomous bodies established under the auspices of ICAR, ICCMR, CSIR, DAE, DRDO, Ministry of Electronics and Information Technology etc. This policy decision is to ensure that the R&D institutions get a large pool of capital over and above the government funding. Government spending public R&D in India is less than 1% of GDP.
Schedule VII of the companies Act, 2013 was accordingly amended by Government in exercise of the powers vested in it under Section 467
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