No, activities that a company is required to perform as per its statutory obligations under any law are not considered CSR (Corporate Social Responsibility) activities. Here's why: Nature of CSR:CSR involves voluntary actions taken by a company to promote social welfare and contribute to sustainableRead more
No, activities that a company is required to perform as per its statutory obligations under any law are not considered CSR (Corporate Social Responsibility) activities. Here’s why:
-
Nature of CSR:
CSR involves voluntary actions taken by a company to promote social welfare and contribute to sustainable development, going beyond what is legally required. -
Statutory Obligations vs. CSR:
Activities mandated by law (such as environmental compliance, mandatory disclosures, or statutory audits) are compulsory business expenses. These are incurred as part of fulfilling legal requirements and do not fall under CSR, which is aimed at additional social initiatives. -
Eligible CSR Activities:
To qualify as CSR, the expenditure must be on activities listed in Schedule VII of the Companies Act, 2013, and should be undertaken voluntarily to benefit society—such as education, health, rural development, and environmental sustainability projects. -
Key Takeaway:
Simply put, if an activity is compulsory under any law, it cannot be treated as CSR because it is not a voluntary, extra initiative taken by the company for social good.
When it comes to Corporate Social Responsibility (CSR), it's important to distinguish between core business operations and activities undertaken for social welfare. Here's what you need to know: 1. Core Business vs. CSR Expenditure Core Business Operations:If a corporate group is primarily engaged iRead more
When it comes to Corporate Social Responsibility (CSR), it’s important to distinguish between core business operations and activities undertaken for social welfare. Here’s what you need to know:
1. Core Business vs. CSR Expenditure
Core Business Operations:
If a corporate group is primarily engaged in running hospitals or educational institutions as part of its main business, the related expenditures are treated as regular business expenses.
A company that operates a chain of hospitals for profit cannot count its operating costs as CSR expenditure because these expenses are integral to its business operations.
CSR Activities:
CSR expenditure is meant for activities that are not part of the regular business but are undertaken for the benefit of society.
If a company donates funds to support an independent hospital or educational institution, or if it initiates additional projects in these sectors that go beyond its regular operations, such expenditure can qualify as CSR spending.
2. Alignment with CSR Guidelines
For any expenditure to be considered CSR:
Conclusion
Operating hospitals and educational institutions as part of a company’s primary business does not count as CSR expenditure.
If a company supports or donates to such institutions outside of its core operations—focusing on social welfare—it may be able to claim that expenditure as CSR, provided it meets the guidelines under Schedule VII.
By clearly separating core business activities from purely philanthropic initiatives, companies can ensure they comply with CSR requirements while maximizing their positive impact on society.
See less