Section 135 of the Companies Act, 2013, inter alia, provides for companies having net worth of rupees five hundred crore or more or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more in a financial year to spend atleast 2% of the average net profits of last 3 years for the company’s Corporate Social Responsibility (CSR) policy. In case the said amount is not spent, the reasons for not doing so are to be disclosed in the Board’s Report. Activities which may be included in the CSR policy by the companies are specified in schedule VII of the Companies Act, 2013.

Section 135 along with Schedule VII and corresponding Corporate Social Responsibility Policy Rules have been notified on 27.02.2014 and have come into effect from 1st April, 2014.

This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha today.

Corporate Social Responsibility obligations require eligible companies to allocate a prescribed share of average profits and disclose any shortfall. Section 135 requires companies meeting prescribed financial thresholds to spend 2% of the average net profits of the preceding three years on CSR activities as set out in Schedule VII, and to disclose in the Board's Report reasons for any shortfall. The provision together with Schedule VII and the CSR Rules was notified on 27.02.2014 and took effect from 1 April 2014.