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For the financial year 2026-27, what cap applies to administrative overheads under rule 7(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014?

Question and options

For the financial year 2026-27, what cap applies to administrative overheads under rule 7(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014?

  1. 5% of the company's average net profits of the three preceding financial years

  2. 10% of the company's average net profits of the three preceding financial years

  3. 5% of the company's total CSR expenditure for the financial year

  4. 10% of the company's total CSR expenditure for the financial year

Answer and explanation

Correct answer: C - 5% of the company's total CSR expenditure for the financial year

Rule 7(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 requires the board to ensure that administrative overheads do not exceed five per cent of the company's total CSR expenditure for the financial year. The cap is measured against CSR spending, not profits; average net profits of the three preceding years are the base for the two per cent spending obligation under section 135(5) of the Companies Act, 2013.

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