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

Verma Agro Ltd spent Rs 1.5 crore on CSR in the last year against a requirement of Rs 1.2 crore. The Board asks the Company Secretary whether the excess can be used. What does section 135(5) of the Companies Act, 2013 permit?

The excess of Rs 0.3 crore may be set off against the CSR spending requirement of succeeding financial years, for such number of years and in such manner as prescribed, under the proviso to section 135(5).

  1. AThe excess may be set off against the spending requirement for succeeding financial years in the prescribed mannerCorrect
  2. BThe excess must be refunded by the Government
  3. CThe excess is automatically treated as a donation exempt from CSR calculation forever
  4. DThe excess cannot be recognised in any manner

Explanation

The third proviso to section 135(5) allows a company that spends more than required to set off the excess against the requirement for such number of succeeding financial years and in such manner as may be prescribed. The excess here is Rs 0.3 crore.

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