Is CSR applicable to Charitable Institutions ? A Big Question
Conditions under Section 135 of the Companies Act, 2013
There are some conditions under these section, which if fulfilled than the company needs to carry out CSR activities, through its own or through some intermediaries. The conditions are as follows: OR OR The word here important is “OR”, means if the company fulfilled any of the condition, than they need to spend at least 2% of the Net profit (As calculated under Section 198 of the Companies Act, 2013). After many debates regarding the role of society in the profitability of the company, the new Companies Act has brought the mandatory application of the money into the Social activities. It was taken from the idea that, as the company is earning because of the society, it should return back something to the society. But I doubt, is the charitable institutions would be liable to make expenditure under CSR activities ?. When reading the language of Section 135, it is silent about the applicability to the non-profit organisations. But there is also no clarification about the exemption of the non-profit organisations under the Act, as the wordings are “all companies.” Recommended Articles As these companies are solely for the motive of charity and not for earning, these section will not come into the picture, as the conditions stipulated in Section 135 would not cover any of the Section 8 company. The reasons for the Section 8 companies not falling in the above category is as follows: So these issue according to me, would be that the charitable organisations, as there main purpose is only not to do any other activity other than social or charitable, these institutions would not be covered for the mandatory provisions of the CSR.
