The Ministry of Corporate Affairs has notified the CSR rules and they would come into effect from April 1. (Agencies)
Under the new laws that govern companies, spending on CSR or social welfare activities is mandatory for certain class of firms. They are required to shell out at least 2 percent of their three-year average annual profit towards such works.
In an official release on Thursday, Corporate Affairs Minister Sachin Pilot said the rules have been finalized after extensive consultations with all stakeholders.
"The rules provide for the manner in which CSR Committee shall formulate and monitor the CSR Policy, manner of undertaking CSR activities, role of the board of directors therein and format of disclosure of such activities in the board's report," Pilot said.
Companies having net worth of at least Rs 500 crore or having minimum turnover of Rs 1,000 crore or those with at least net profit of Rs 5 crore, have to make CSR spend.
Livelihood enhancement and rural development projects, promoting preventive health care and sanitation as well as making safe drinking water available would be considered as CSR activities.
Working towards protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts would also come under CSR ambit.
Various activities aimed at reducing inequalities faced by socially and economically backward groups have been included.
Measures for the benefit of armed forces veterans, war widows and their dependents, setting up homes and hostels for women and orphans, setting up of old age homes, day care centres and such other facilities for senior citizens would be considered as CSR work.
Other CSR activities would be ensuring ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water.
As per the release, training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports, contributions or funds provided to technology incubators located within academic institutions which are approved by the central government would also be CSR.
Notifications have been issued for Section 135 and Schedule VII of the Companies Act, 2013 that relate to CSR spending by companies.
The Ministry of Corporate Affairs has notified the CSR rules and they would come into effect from April 1.