The new Companies Act mandates big corporates to spend on CSR activities
Spending in Corporate Social Responsibilities (CSR) has been a new trend by the MNCs in the last few years. They want to give back to the society from where they are making whopping profits. According to the consultancy firm Ernst & Young (E & Y), the provisions of the recently amended Companies Act make it mandatory for such allocations get implemented fast. India Inc. will be investing around Rs 22,000 crore towards corporate social responsibility (CSR) in the current fiscal.
Vijay Ganapathy from E & Y India’s advisory services, speaking at a seminar mentioned that nearly 16,500 companies will invest Rs 22,000 crore towards CSR as per the current mandate. Education, special education, healthcare, preventive healthcare, water, sanitation, training in sports, art, culture, rural development projects etc. are the broad areas in which this money raised by CSR initiatives will be used. The corporates encourage their employees not only to contribute money, but their time and expertise to develop and execute these initiatives.
Ganapaty also mentioned that as per the provisions of the new Companies Act, any company which has a turnover of more than Rs 1,000 crore or a net worth of over Rs 500 crore or a net profit of over Rs 5 crore, has to spend 2 % of their annual net profit on CSR activities.
Source- Financial Chronicle
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