Government will keep close watch on social welfare spending by corporates to check whether they are complying with Corporate Social Responsibility (CSR) norms under the new companies law.
Certain class of profitable companies are required to spend at least two per cent of their three-year average annual net profit towards CSR activities. The norms came into force from April 1.
Replying to questions in Rajya Sabha, Minister of State for Corporate Affairs Nirmala Sitharaman said the Companies Act, 2013 came into operation this year only and the government was watching the spendings under CSR.
"We are keenly watching" the companies," she said, adding, in case a company does not meet the norms, government would certainly ask for reasons.
The Act does not mandate CSR for all companies. However, every company having net worth or net profit of Rs 500 crore or more or turnover of Rs 1,000 crore or more during any financial year has to constitute a CSR Committee of the Board and take up CSR activities.
Sitharaman said there are no tax exemptions for CSR activities, except for spending on 11 specific activities.
In her written reply, she said the issue of amending rules relating to CSR with a view to plugging any loophole can be examined only after some information about the actual implementation is available.
As relevant provisions of the law have come into force this year and CSR policies of companies are in the process of formulation, specific details would be available once Board reports are available after September, 2015, she said.