Govt Changes CSR Spending Norms

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The government has made some changes in the norms meant for Corporate Social Responsibility (CSR) activities under the Companies Act, under which, certain class of profitable companies are required to spend at least 2% of their three-year annual average net profit towards CSR activities.

According to the Act, companies are allowed to build CSR capacities for their own personnel through other institutions on the condition that such expenses do not surpass 5% of the total amount spent on social welfare activities in a financial year. The Corporate Affairs Ministry has said that 5% cap would include "expenditure on administrative overheads."

The changes have been made to the Companies (Corporate Social Responsibility Policy) Rules, 2014, through a notification dated September 12.

As per the earlier norms, companies could build CSR capacities of their own personnel and their implementing agencies through institutions with a proven track record of at least three financial years. However, such expenditure should not exceed by 5 % of company's total CSR expenditure in a single financial year.
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