<h1>Companies Must Spend 2% on CSR if Criteria Met; CSR Not Business Expense but Some Tax Exemptions Apply.</h1> Section 135(1) of the Companies Act, 2013 requires companies meeting certain financial criteria to allocate at least 2% of their average net profits from the past three years to Corporate Social Responsibility (CSR) activities. The Ministry has not encountered cases where companies fail to spend on CSR due to tax assessments. The Finance Act, 2014 specifies that CSR expenses are not considered business expenditures, and while no direct tax exemptions exist for CSR spending, certain activities listed in Schedule VII are eligible for tax exemptions under the Income Tax Act, 1961. This information was provided by the Minister of Corporate Affairs in the Rajya Sabha.