With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements: 1. CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities. 2. CSR rules do not specify minimum spending on CSR activities. Which of the statements given above is/are correct?

With reference to Corporate Social Responsibility (CSR) rules in…

1 only
2 only
Both 1 and 2
Neither 1 nor 2

Answer

1 only

Statement 1: Correct. Under the Companies Act, 2013 and CSR Rules, activities undertaken in the normal course of business, or those benefiting only employees and their families, are not treated as CSR; CSR should benefit the wider community, not the company directly.
Statement 2: Incorrect. The law does specify a minimum benchmark: eligible companies are required to spend at least 2% of the average net profits of the preceding three financial years on CSR.
Therefore, only Statement 1 is correct.

1 only

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