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  3. Govt finalizes CSR guidelines for public sector units

Govt finalizes CSR guidelines for public sector units

13 Mar 2013 Evaluate

The government has finalized the revised guidelines on corporate social responsibility (CSR) and sustainability, for public sector units, under which they will have to set aside a portion of their profit for social activities with effect from April, 2013. According to the guidelines, ‘the financial component/budgetary spend on CSR and sustainability will be based on the profitability of the company and shall be determined by the profit after tax (PAT) of the company in the previous year.’

The range of budgetary allocation for CSR and sustainability activities would be 3-5 per cent, if the PAT of CPSE in the previous year is less than Rs 100 crore and if it is between Rs 100 crore and Rs 500 crore, it will be 2-3 per cent. Further, for the public sector unit whose PAT in the previous year is Rs 500 crore and above, the range would be 1-2 per cent.

However, loss making companies are not mandated to allocate specific funding for CSR activities. In this case, they must practice CSR and sustainability policies by combining them with their business plans, strategies and processes, which do not involve any financial expenditure, which should be approved by their respective boards of directors.

As per the guidelines, the unused budget for CSR activities planned for a year will not lapse and will instead be carried forward to the next year. However, the public sector units are required to disclose the reasons for not fully utilizing the budget allocated.

Further, it is mandatory for public sector units to take up at least one major project for development of a backward district as identified by the Planning Commission for its backward region grant fund scheme and one major project for environment sustainability. Moreover, for emergency needs, which include relief work undertaken in natural calamities, 5 per cent of the annual budget needs to be earmarked.

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