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Govt gives clarity on social welfare spending for public sector enterprises

The government has said corporate social responsibility (CSR) activities pursued by public sector enterprises (PSEs) would be covered under the social welfare spending provisions of the new Companies Act. Corporate social responsibility spending by central public sector undertakings (CPSEs) is based on the guidelines issued by the Department of Public Enterprises and efforts are on to harmonise them with that of provisions in the new law.

Under the Companies Act, 2013, certain class of profitable entities are required to spend at least two per cent of their three-year average annual net profit towards corporate social responsibility activities. The government has said CSR activities pursued by public enterprises would be covered under the social welfare spending provisions of the new Companies Act. The matter has been communicated to all Ministries and Departments by DPE through an office memorandum dated 2 July.

The Corporate Affairs Ministry, which is implementing the new legislation, has clarified that ‘ongoing orporate social responsibility activities/projects of CPSEs can be covered under any of the items in Schedule-VII of the Companies Act, 2013’. At present, CSR spending by central public sector undertakings is based on guidelines issued by the Department of Public Enterprises (DPE). Current Department of Public Enterprises guidelines require central PSUs to shell out 1-5 per cent of their profit after tax towards social welfare spending.
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