Public sector companies will soon have to follow the social welfare spending norms as prescribed under the new companies law that will replace existing guidelines in this regard.

At present, Corporate Social Responsibility (CSR) spending by central public sector undertakings is based on guidelines issued by the Department of Public Enterprises (DPE).

Under the Companies Act, 2013, certain class of profitable entities are required to spend at least 2% of their three-year average annual net profit towards CSR activities.

According to an official, DPE would be harmonising CSR norms for public sector enterprises with that of provisions in the new Companies Act.

DPE would get it vetted by the corporate affairs ministry before coming out with the amended rules, the official added.

The ministry is implementing the Companies Act.

Current DPE guidelines require central PSUs to shell out 1-5% of their profit after tax towards social welfare spending.

Entities having a profit after tax of less than R100 crore have to set apart 3-5% for “CSR and sustainability activities”. (Financial Express)