New Delhi: Expanding the ambit, work carried out by corporates for slum area development will be now considered as social welfare spending activity under the new companies law. Under the Companies Act, 2013, certain class of profitable companies are required to shell out at least 2 per cent of three-year annual average net profit towards Corporate Social Responsibility (CSR) activities.
Through a recent notification, the Corporate Affairs Ministry has added 'slum area development' to the list of activities that would classify as CSR under the Act. In this regard, the Ministry has amended Schedule VII -- pertaining to CSR works -- in the Companies Act, 2013. "The term 'slum area' shall mean any area declared as such by the central government or any state government or any other competent authority under any law for the time being in force," it said in a notification dated August 6.
In June, the Ministry had said slum re-development projects and housing for Economically Weaker Sections (EWS), among others, would be covered under CSR. Among others, works in the areas of disaster relief and setting up of trauma care around highways in case of road accidents would also be covered, while any project meant for development of rural India would be a permitted CSR activity.
The Ministry, in June, had said that the stakeholders must "liberally" interpret the CSR-related provisions of the Act. CSR norms would be applicable to companies having at least Rs 5 crore net profit, or Rs 1,000 crore turnover or Rs 500 crore net worth.
Such companies would need to spend two per cent of their three-year average annual net profit on CSR activities in each financial year, beginning 2014-15 fiscal. Livelihood enhancement and rural development projects, working towards protection of national heritage, art and culture, including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts would come under CSR ambit. Various activities aimed at reducing inequalities faced by socially and economically backward groups have been included.
Measures for the benefit of armed forces veterans, war widows and their dependents, setting up homes and hostels for women and orphans, setting up of old age homes, day care centres and such other facilities for senior citizens would be considered as CSR work.
Other CSR activities include ensuring ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water.