Cos may have to spend 2% of profits on social causes

Bill Says Cos Must Script Policy For Spend

THE government has watered down its proposal on corporate social responsibility by not including a provision in the Companies Bill that would have mandated firms to spend 2% of their profits on social causes.

The final proposal only requires a company to have a policy that targets to spend 2% of its profit on CSR.The Bill,however,seeks to make it compulsory for a company to give details of the money it has spent on CSR in its annual report.

Companies will have to have a policy as to how they will spend the 2% of their profits on CSR and there must be a disclosure if the money has been spent, corporate affairs minister Salman Khurshid told ET.

You can say it is not entirely voluntary,might say it is not mandatory.It is in between somewhere.

The proposal is a dilution of the governments stance before the parliaments standing committee on finance.The government had told the committee that it was considering making the CSR spend mandatory.

The government had suggested that it could ask companies having a minimum net worth of 500 crore,or an annual turnover of 1,000 crore,or a net profit of Rs 5 crore in a year to spend at least 2% of their average net profits during the three preceding fiscals on CSR.

While the general view is that companies would welcome a dilution in the governments stance,some in the corporate world say there is actually no dilution.