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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Corporate Social Responsibility (CSR)

Meera Chemicals Ltd, in existence for six years, is covered by Section 135 in FY 2026-27. Its net profits under Section 198 were Rs 20 crore (FY 2023-24), Rs 25 crore (FY 2024-25) and Rs 30 crore (FY 2025-26). What minimum CSR spend must the Board ensure for FY 2026-27?

The minimum spend is Rs 0.50 crore. The Board must ensure at least two per cent of the average net profit of the three immediately preceding financial years; the average is Rs 25 crore, and two per cent of that is Rs 0.50 crore.

  1. ARs 1.50 croreCorrect
  2. BRs 0.60 crore
  3. CRs 0.50 crore
  4. DRs 1.00 crore

Explanation

The base is the average net profit of the three immediately preceding financial years: (20+25+30)/3 = Rs 25 crore. Two per cent of 25 crore = Rs 0.50 crore. Rs 0.60 crore uses only the latest year's profit of Rs 30 crore. Correct figure is Rs 0.50 crore.

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