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CS Professional · CSR and Social Governance · Corporate Social Responsibility

Sunrise Textiles Ltd, a company liable under section 135, plans to spend its CSR amount on a project providing safe drinking water and sanitation in villages near its mill in Tamil Nadu. Is this a permissible CSR spend?

The spend is permissible. Schedule VII includes eradicating hunger and poverty and promoting health care, sanitation and safe drinking water. Section 135(5) also directs companies to prefer the local area where they operate, so a project near the mill fits both the activity and location expectations.

  1. AYes, because eradicating hunger, poverty and promoting health care, including sanitation and safe drinking water, is an activity in Schedule VIICorrect
  2. BNo, because activities near the company's own premises are excluded
  3. CNo, because water projects can be funded only through the Prime Minister's relief fund
  4. DYes, but only if the company obtains prior approval of the Tribunal

Explanation

Section 135(3)(a) requires the CSR Policy to cover activities in areas or subjects specified in Schedule VII. Schedule VII covers eradicating hunger, poverty and malnutrition, promoting health care including preventive health care, sanitation and safe drinking water. The proviso to section 135(5) in fact gives preference to the local area where the company operates, so local projects are encouraged, not excluded.

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