With the notification of CSR provisions in Companies Act, 2013, it’s time for Indian Companies to imbibe the culture of giving back to the society. Essentially, it requires the prescribed companies to spend at least 2% of the average net profits of 3 immediately preceding financial years and setting up a CSR Committee for formulation and monitoring of CSR Policy. However the Board is restricted to confine to CSR activities mentioned in Schedule VII.

1.
Corporate
Social
Responsibility

2.
Note:
• A
company’s
holding
or
subsidiary,
which
satisfies
the
above
criteria,
will
also
have
to
constitute
CSR
Committee.
• Every
Foreign
company
having
its
branch
office
or
project
office
in
India,
satisfying
the
above
criteria
will
have
to
constitute
the
Comm.
Companies
falling
under
CSR
purview
Every
company
(including
foreign
company)
having
Net
Worth
of
INR
500
crores
or
more
Turnover
of
INR
1000
crores
or
more
Net
profit
of
INR
5
crores
or
more
or
or
during
any
financial
year
Needs
to
constitute
CSR
Committee
Composition
of
CSR
Committee
At
least
3
directors
Out
of
which
1
should
be
independent
Exceptions
Companies
not
required
to
appoint
independent
director
can
form
Committee
without
such
director
Private
Company
having
only
2
directors
can
form
Committee
with
only
2
directors

3.
Note:
• Company
should
give
preference
to
local
area
and
areas
around
it
where
it
operates
for
Corporate
Social
Responsibility
activities
Neither
specified
in
Act
nor
Rules
Frequency
of
Board
Meeting
What
is
Corporate
Social
Responsibility
Defined
in
Companies
(CSR
Policy)
Rules
2014
It
means
and
includes,
but
is
not
restricted
to
Activities
as
per
Schedule
VII
Any
activity
undertaken
by
Board
as
per
CSR
Policy
Activities
covered
under
Schedule
VII
Eradication
of
hunger,
poverty,
malnutrition
Promoting
education
Promoting
gender
equality,
empowering
women
Environment
sustainability
Protection
of
national
heritage
Benefit
of
armed
forces
veterans
Promoting
sports
Contribution
to
PM
National
relief
fund
and
others
Contribution
to
technology
incubators
Rural
Development
Projects

4.
What
is
CSR
Expenditure
Contribution
to
CSR
Corpus
Should
be
approved
by
Board
on
the
recommendation
of
CSR
Committee
At
least
2%
of
average
net
profits
of
3
immediately
preceding
financial
years
shall
be
spent
on
CSR
CSR
expenditure
done
only
in
India
will
be
considered
as
CSR
Programs
benefiting
only
employees
will
not
be
considered
CSR
Any
contribution
to
political
party
will
not
be
considered
CSR
How
to
structure
CSR
Activity
CSR
activity
may
be
carried
out
through
Registered
Trust
Registered
Society
Company
Holding,
subsidiary
or
associate
company
Collaborating
with
other
companies

5.
Note:
• CSR
expenditure
shall
restrict
to
Schedule
VII
and
therefore
the
Board
has
to
limit
the
scope
of
CSR.
Ingredients
of
CSR
Policy
Activities
should
relate
to
Schedule
VII
Shall
exclude
activities
undertaken
in
the
normal
course
of
business
Shall
clearly
specify
a
list
of
CSR
projects
along
with
implementation
schedule
and
monitoring
process
Shall
clearly
state
that
the
surplus
arising
from
the
CSR
Projects
shall
not
form
a
part
of
business
profit
of
Company
Role
of
CSR
Committee
Formulate
&
Recommend
to
Board,
a
CSR
Policy
Recommend
amount
of
CSR
expenditure
Monitoring
CSR
Policy
Committee
to
institute
a
transparent
monitoring
mechanism

6.
Role
of
Board
Approve
CSR
Policy
on
recommendation
of
Committee
Ensure
CSR
Policy
to
include
only
Schedule
VII
activities.
Ensure
that
activities
in
CSR
Policy
are
undertaken
Disclosure
of
CSR
If
Board
fails
to
spend
prescribed
CSR
expenditure
Annual
Disclosure
On
Website
Specify
reasons
for
not
spending
the
amount
in
Board
Report
In
Board
Report,
as
per
the
format
given
in
CSR
Rules
As
per
the
format
given
in
CSR
Rules