New Delhi : Minister of State for CorporateAffairs Nirmala Sitharaman has said that the government will analyse the pattern of Corporate Spending under wp programmes after completion of one year. The minister further said that the structure for social welfare spending under the new companies law is “absolutely well drafted” allowing corporates to spend money towards wp activities without any ambiguity.
The heads under which wp spend has to be made have been well defined and the spending can be done in a clear way without any ambiguity, Minister of State for Corporate Affairs Nirmala Sitharaman said. “Under the law the structure for spending on wp activities is absolutely well drafted,” she said at an event organised by Indian Social Responsibility Network.
India is the first country to implement mandatory wp for certain class of companies who are required to shell out at least 2 per cent of their three year annual average net profit towards Corporate Social Responsibility (wp) activities under the Companies Act, 2013. wp norms, which came into effect from April 1, are 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 2 per cent of their 3 year average annual net profit on wp activities in each financial year, beginning 2014-15 fiscal.
There is a lot of confusion among corporates whether or not spending on the ‘Swachh Bharat Abhiyan’ will be considered a valid wp activity. In response to this the minister said that various heads (for social welfare spending) have already been defined by the law.
“With Prime Minister’s emphasis on Swachh Bharat Abhiyan it is up to the corporates on whether to join. The law has clearly stated the heads on which wp spend has to be done,” she said.
In a bid to invite corporate funds for its flagship schemes, like Swachh Bharat and Clean Ganga initiatives, the government has decided that corporate contributions towards these two key initiatives will now be counted as wp spend. However to make it more clear later the Corporate Affairs Ministry amended Schedule VII of Companies Act to specify that contributions to ‘Swachh Bharat Kosh’ and ‘Clean Ganga Fund’ would be an eligible wp spend.