2% CSR spending unlikely to become mandatory | SupportBiz

In Brief

2% CSR spending unlikely to become mandatory


The Corporate Affairs Ministry is examining demands that seek a mandatory 2% CSR expenditure from large firms in India. The Ministry seems unlikely to include this in the new Companies Bill (2011), reports PTI. 

CSR regulations already state that large companies should spend 2% of their three-year average profit on CSR initiatives.

All large companies will have to give proof of CSR expenditure in their accounts, but a failure to do so will not be penalized. The Ministry at this point does not seem to be in favour of making the CSR spending mandatory, stating that proof of CSR expenditure in the accounts of all companies is enough to ensure that some CSR expenditure is happening. 

Some MP’s are pushing for the need to make the CSR spending mandatory for all corporates, insisting that a penalty be imposed on companies that do not comply with the regulation.

The new Companies Bill, being scrutinised by a parliamentary committee, calls for higher accountability from corporate India viz. tightert corporate go vernance norms and greater disclosure, according to a PTI news report published in the Business Standard.