CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment
Under Section 135 of the Companies Act, 2013, a company meeting the prescribed net worth, turnover or net profit threshold must spend on CSR a minimum percentage of its average net profits of the preceding three financial years. What is that percentage? Choose the option that is correct.
The minimum CSR spend is 2 per cent of the company's average net profits of the immediately preceding three financial years, for companies meeting the prescribed thresholds under Section 135 of the Companies Act, 2013. Figures such as 1, 5 or 10 per cent are not the statutory requirement.
- A1 per cent
- B5 per cent
- C10 per cent
- D2 per centCorrect
Explanation
The Act requires the board to ensure the company spends at least 2 per cent of the average net profit of the immediately preceding three financial years on CSR policy activities. The 1, 5 and 10 per cent figures are not the statutory minimum.
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