CSEET · Economic and Business Environment · Elements of Corporate Governance
A company that is required to spend on CSR has average net profit of Rs 40 crore for its three immediately preceding financial years. What is the minimum CSR amount the Board must ensure is spent in the current year?
The minimum CSR spend is Rs 0.8 crore. The Act requires at least two per cent of the average net profit of the three immediately preceding financial years, and two per cent of Rs 40 crore equals Rs 0.8 crore.
- ARs 0.4 crore
- BRs 0.8 croreCorrect
- CRs 2 crore
- DRs 8 crore
Explanation
Section 135(5) requires at least two per cent of the average net profits of the three immediately preceding years. 2% of Rs 40 crore = Rs 0.8 crore. Rs 0.4 crore uses 1%, and Rs 8 crore uses 20%.
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