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?

Question

YESPYQ · Accepted Answer

Correct answer: 1 only. Statement 1 is correct : According to the Companies Act, 2013, CSR activities must benefit society at large and not be directed toward the company’s employees or their families. Ac- tivities that serve the company’s business interests or are part of its normal operations are also excluded from being considered CSR. Statement 2 is incorrect : The CSR rules mandate that eligible companies spend at least 2% of their average net profits from the preceding three financial years on CSR activities. This is a clearly defined minimum spending requirement under Section 135 of the Companies Act, 2013. SUPER HINT For S1, CSR = Corporate Social Responsibility → The focus is on society, not on the company or its employ- ees. This logically sounds valid. For S2, If no minimum spending is prescribed, companies could just say &quot;we spent nothing&quot; and still be compliant — which defeats the whole purpose of mandatory CSR. Hence likely false. 69

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