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Which of the following statements are correct in the context of Corporate Social Responsibility (CSR)?…

Statements I and II are correct in the context of companies covered by the CSR requirement. Section 135 of the Companies Act, 2013 requires eligible companies to spend at…

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Which of the following statements are correct in the context of Corporate Social Responsibility (CSR)?

(I) The provision making CSR legally mandatory in India is enshrined in the Companies Act.

(II) Under CSR, it is mandatory for companies to spend at least 2% of their average net profit on social development activities.

(III) CSR activities are limited solely to environmental protection.

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Answer and explanation

Correct answer A

Statements I and II are correct in the context of companies covered by the CSR requirement. Section 135 of the Companies Act, 2013 requires eligible companies to spend at least 2% of their average net profits, ordinarily calculated over the preceding three financial years, on CSR. The obligation depends on statutory financial thresholds. CSR is broader than environmental protection and also covers areas such as education, healthcare and rural development.

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