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With reference to Corporate Social Responsibility, consider the following statements:
1. The concept of CSR is governed by Corporate Social Responsibility Act, 2013.
2. The CSR provisions are applicable to companies with an annual turnover of 1,000 crore.
Which of the statements given above is/are correct ?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
With reference to Corporate Social Responsibility, consider the follow...
- The term "Corporate Social Responsibility" in general can be referred to as a corporate initiative to assess and take responsibility for the company's effects on the environment and impact on social welfare.
- In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013. Hence, statement 1 is not correct.
- India is the first country in the world to mandate CSR spending along with a framework to identify potential CSR activities.
- The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore and more, or a net worth of Rs. 500 crore and more, or a net profit of Rs. 5 crore and more. Hence, statement 2 is correct.
Most Upvoted Answer
With reference to Corporate Social Responsibility, consider the follow...
- The term "Corporate Social Responsibility" in general can be referred to as a corporate initiative to assess and take responsibility for the company's effects on the environment and impact on social welfare.
- In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013. Hence, statement 1 is not correct.
- India is the first country in the world to mandate CSR spending along with a framework to identify potential CSR activities.
- The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore and more, or a net worth of Rs. 500 crore and more, or a net profit of Rs. 5 crore and more. Hence, statement 2 is correct.
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With reference to Corporate Social Responsibility, consider the follow...
Explanation:
The correct answer is option 'B' - 2 only. Let's understand the statements and their correctness one by one:
Statement 1: The concept of CSR is governed by Corporate Social Responsibility Act, 2013.
This statement is incorrect. There is no specific legislation called the Corporate Social Responsibility Act, 2013 in India. However, the concept of CSR is governed by Section 135 of the Companies Act, 2013.
Section 135 of the Companies Act, 2013 mandates certain companies to spend a specified amount on CSR activities. These companies are required to constitute a CSR committee, formulate a CSR policy, and spend at least 2% of their average net profits of the preceding three financial years on CSR activities.
Statement 2: The CSR provisions are applicable to companies with an annual turnover of 1,000 crore.
This statement is correct. As per Section 135 of the Companies Act, 2013, the CSR provisions are applicable to companies meeting any of the following criteria:
- Companies with a net worth of 500 crore or more.
- Companies with a turnover of 1,000 crore or more.
- Companies with a net profit of 5 crore or more.
If a company meets any of the above criteria, it is required to comply with the CSR provisions and spend at least 2% of its average net profits on CSR activities. However, if a company fails to spend the required amount, it must provide reasons for such failure in its annual report.
Conclusion:
In conclusion, only statement 2 is correct. The concept of CSR is governed by Section 135 of the Companies Act, 2013, and the CSR provisions are applicable to companies with an annual turnover of 1,000 crore or more.
The correct answer is option 'B' - 2 only. Let's understand the statements and their correctness one by one:
Statement 1: The concept of CSR is governed by Corporate Social Responsibility Act, 2013.
This statement is incorrect. There is no specific legislation called the Corporate Social Responsibility Act, 2013 in India. However, the concept of CSR is governed by Section 135 of the Companies Act, 2013.
Section 135 of the Companies Act, 2013 mandates certain companies to spend a specified amount on CSR activities. These companies are required to constitute a CSR committee, formulate a CSR policy, and spend at least 2% of their average net profits of the preceding three financial years on CSR activities.
Statement 2: The CSR provisions are applicable to companies with an annual turnover of 1,000 crore.
This statement is correct. As per Section 135 of the Companies Act, 2013, the CSR provisions are applicable to companies meeting any of the following criteria:
- Companies with a net worth of 500 crore or more.
- Companies with a turnover of 1,000 crore or more.
- Companies with a net profit of 5 crore or more.
If a company meets any of the above criteria, it is required to comply with the CSR provisions and spend at least 2% of its average net profits on CSR activities. However, if a company fails to spend the required amount, it must provide reasons for such failure in its annual report.
Conclusion:
In conclusion, only statement 2 is correct. The concept of CSR is governed by Section 135 of the Companies Act, 2013, and the CSR provisions are applicable to companies with an annual turnover of 1,000 crore or more.
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With reference to Corporate Social Responsibility, consider the following statements:1. The concept of CSR is governed by Corporate Social Responsibility Act, 2013.2. The CSR provisions are applicable to companies with an annual turnover of 1,000 crore.Which of the statements given above is/are correct ?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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