With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements :
- 1.CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities.
- 2.CSR rules do not specify minimum spending on CSR activities.
Which of the statements given above is/are correct ?
Show answer
Answer: A. Statement 1 is correct: the Companies (CSR Policy) Rules, 2014 say activities that benefit only the company's employees and their families are not CSR. Statement 2 is wrong: the CSR framework requires eligible companies to spend at least 2% of their average net profit of the last three years on CSR, under Section 135(5) of the Companies Act, 2013. So 1 only.
Watch for: The 2% rule sits in the Act rather than the Rules, which can make Statement 2 look true; UPSC treats the framework as a whole.
Why the other options are wrong
- B. Wrong because a minimum 2% spending is mandated for eligible companies.
- C. Wrong because Statement 2 is false.
- D. Wrong because Statement 1 correctly states the exclusion rule.
Source to check: Companies Act, 2013, Section 135(5); Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended in 2021), definition of CSR in Rule 2(1)(d); Ministry of Corporate Affairs CSR FAQs
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.