Companies' CSR works to be monitored from next year: Govt

CSR expenditure has to be calculated on the basis of profit before tax, says Arun Jaitley

Government today said it would start monitoring CSR activities of corporates under the new Companies Act from next year.

Certain class of profitable companies are required to shell out at least 2% of their three-year annual average net profit towards Corporate Social Responsibility (CSR) works. These norms have come into effect from April 1.

"This being the first year of implementation of the provisions, it will be possible to initiate monitoring of the CSR activities under the above provision from next year only," Minister of State for Corporate Affairs Nirmala Sitharaman informed the Rajya Sabha in a written reply.

Companies with a turnover of Rs 1,000 crore or more, at least Rs 500 crore net worth or minimum Rs 5 crore net profit are required to spend on CSR, according to Section 135 of the Companies Act, 2013.

In a separate written statement, Corporate Affairs Minister Arun Jaitley said that CSR expenditure has to be calculated on the basis of profit before tax.

Noting that there has been an inaccuracy in a reply to a supplementary question on CSR in the Rajya Sabha on July 8, the government said that reference to "profit after tax/post tax profit was meant to refer to profit before tax".