CORPORATE SOCIAL RESPONSIBILITY [CSR]: Section 135 of Companies Act, 2013

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There is a social responsibility of every individual & corporation towards nature, environment & society at large. Therefore for a company registration in India, one must adhere with the CSR guidelines as specified in the companies act, 2013.

Section 135 of Companies Act:

Section 135 Companies act, implies the formation of a corporate social responsibility committee or CSR committee consisting of three or more directors. This CSR committee must ensure that the company is spending the requisite amount of 2% in every financial year on the CSR activities.

Which corporation comes under the ambit of CSR: Section 135 companies act, 2013

  • Company having a net worth of Rs. 500 Crore; Or
  • Company with an annual turnover of Rs. 1000 Crore; Or
  • Company which is having an annual net profit of Rs. 5 Crore.

If your business falls under any of the above business categories then you must find the CA services online or get in touch with your Chartered Accountant at the earliest.

How does the CSR Committee work?

Section 134 mandates that the committee must file the report

  • Containing the details of composition of the CSR Committee.
  • Recommendation of the committee to the company’s board.
  • Monitor the CSR activities of the company.

How much should one corporation spend on CSR activities?

The minimum amount which a company is bound to spend on their CSR activities is 2% of their average annual net profit of three (3) immediately preceding financial year.

As there is a minimum amount being specified under the companies act, 2013 there is no maximum limit for the same. Companies can also spend more than 2% in case they wish to do so.

In addition to the above mentioned details a company must prioritise their CSR activities in their region of operation since this will signify a sense of responsibility of the company towards the region in which it operates.

What are the benefits attached with CSR activities?

Goodwill & Public relations

CSR helps in improving the public image of the company at large by considering the steps initiated by the company for the betterment of the society and increase the goodwill of the company by positive narrative & word of mouth.

Social Media Visibility

CSR activity brings the organization into the limelight of the social media which increases the media coverage and the social presence of the company.

Enhance the brand value

Building a social media presence and the customers having a strong narrative towards your company then certainly the brand value of your organization will become strong over the time. This brand value will help in growth of your revenues, more customer loyalty, satisfied customers and enhance your relationship with them.

Outshine among your competitors

If your CSR activities are perfect and unique than those which your competitors are opting for then certainly you will see the change in your revenue figures.

This is an opportunity for every business that they can leverage in their favor. Most businesses consider this as an expense or a burden but this is a chance to connect with your potential audience & build an informal connection and then your real side, value & beliefs of your organization.

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