There are several different laws and policies that mandate CSR expenditure and seek to standardize how programs are disclosed and reported.
The New Companies Act in India mandates CSR expenditure for many Indian companies by requiring them to report that at least 2% of the average net profits (from the previous three financial years) have been spent on CSR initiatives. Section 135 of the New Companies Act applies to the following companies:
- Companies having a net worth of Rupees five hundred crore or more;
- Companies have a turnover of Rupees one thousand crore or more; and
- Companies have a net profit of Rupees five crore or more.
Furthermore the Securities and Exchange Board of India (SEBI) has mandated that the largest businesses in India file an Annual Business Responsibility Report (ABRR) as part of their annual financial disclosure. ABBR reports should describe the measures taken by companies on the 9 key principles of the National Voluntary Guidelines for Social, Environmental and Economic Responsibilities to Business (The National Voluntary Guidelines). SEBI has also prescribed a framework that companies should report in.
The National Voluntary Guidelines were released by the ministry of Corporate Affairs and have been formulated to encourage the adoption of corporate sustainability reporting with a view to it becoming a mainstream report. The can be adopted by businesses irrespective of size, scale or industry. The National Voluntary Guidelines were designed with an "Apply or Explain" principle, where businesses need to either disclose or explain why they are not in a position to provide the information at this time.
For more information and The National Voluntary Guidelines click here
Innovaid can help you understand and comply with all your CSR regulatory requirements.