The bill also requires every company, which has a net worth of 5 billion rupees (almost $82 million) or more; or a turnover of 10 billion rupees or more; or net profit of 50 million rupees or more during any financial year, to spend at least 2 percent of its average net profit earned during the three immediately preceding financial years, every year on social welfare programs.
“Strictly speaking, the CSR (corporate social responsibility) requirement in the new bill is not mandatory, because there are ways out for companies, who can cite compelling reasons to avoid earmarking 2 percent of their profits for social welfare programs,” Christopher Krishnamoorthy, an associate partner at Majmudar & Partners, an Indian law firm based in Mumbai, told IBTimes.
“On a personal level, I find the CSR spending requirement unusual, and I am not aware of similar laws internationally, apart from tax-breaks and incentives provided toward CSR expenditure. The Indian provision is akin to a sort of tax,” Krishnamoorthy said.
The Bill is expected to be enacted to a Law shortly after the President signs the same.
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