NEW DELHI (India CSR): Companies can spend their CSR funds for activities related to the ‘Har Ghar Tiranga’ campaign, according to the government.
The campaign is being organised by the government as part of the Azadi Ka Amrit Mahotsav to encourage people to bring home the national flag and hoist it to mark the 75th year of India’s independence.
Under the Companies Act, 2013, certain class of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities.
In a circular, the corporate affairs ministry said the campaign is aimed to invoke the feeling of patriotism in the hearts of people and to promote awareness about the Indian national flag.
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“Spending of CSR funds for the activities related to this campaign such as mass scale production and supply of the national flag, outreach and amplification efforts and other related activities are eligible CSR activities,” the circular said.
The activities are eligible for CSR funds under the provisions of Schedule VII of the Companies Act pertaining to promotion of education relating to culture.
Schedule VII pertains to CSR activities.
The circular also noted that companies can undertake these activities subject to fulfilling the Companies (CSR Policy) Rules, 2014 and related circulars/ clarifications issued by the ministry.
The Companies Act, 2013 is implemented by the ministry.
CSR Provision in India
According to the Companies Act, firms with a net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or above, or net profit of `5 crore or more, are required to spend 2% of their average net profit of the preceding three years on CSR activities. Defaults are treated as a civil offence.
The ministry’s circular said: “Spending of CSR funds for the activities related to this campaign such as mass scale production and supply of the national flag, outreach and amplification efforts and other related activities are eligible CSR activities.”
The activities are made eligible for CSR funds under the provisions of Schedule VII of the Companies Act, which deal with the promotion of education relating to culture.
Total CSR Spending in 2021
Spending on CSR across states stood at Rs 24,864 crore in the pandemic year of FY21, little changed from that of Rs 24,888 crore in the previous year, according to the data available with the official CSR portal. Maharashtra, Gujarat, Karnataka, Delhi and Tamil Nadu were major recipients of CSR funds in FY21.
The CSR spending is typically a process driven by the board of a company, which is empowered to plan, decide, execute and monitor activities based on the recommendations of its CSR committee. The government does not direct companies to spend CSR funds in a particular geographical area or on a specific activity. However, it stipulates activities that are eligible for CSR funds for consideration by the companies.
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