Under Section 135 of the Companies Act, 2013, profit making companies above a certain threshold are required to spend at least 2 percent of their average net profit made during the three preceding financial years, on CSR activities or specify reasons for failure to spend. The year 2014-15 being the first year of implementation of CSR under the legislation, it is premature to assess the level of compliance under the provision of the Act.

 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 compliance requires mandated expenditure or public disclosure of reasons for non-spending under the statute. Companies meeting profitability thresholds must allocate a mandated portion of average net profits over the preceding three financial years to corporate social responsibility activities or disclose reasons for non-expenditure, imposing both a substantive spending obligation and a procedural disclosure requirement applicable from the law's initial year of implementation.