XYZ Co. Ltd. is a socially responsible Company. The Board of company ensures that the company will spend on CSR activities in every financial year. Being a company secretary advice the Board what they need to keep in min

The board of XYZ Limited should keep in mind following points regarding expenditure on CSR which have been provided under Section 135 (5) of the Companies Act 2013. The Board of every company shall ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. This amount will be CSR expenditure. If the company fails to spend such amount, the Board shall, in its report specify the reasons for not spending the amount. The company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities. Expenditure incurred on specified activities under Schedule VII that are carried out in India only will qualify as CSR expenditure. Such expenditure includes contribution to the corpus or on projects or programs relating to CSR activities. Expenditure incurred in undertaking normal course of business will not form a part of the CSR expenditure. Companies would need to clearly distinguish those activities which are undertaken specifically in pursuance of normal course of business and those that are done incrementally as part of the CSR initiatives. Any surplus arising out of CSR activities will not be considered as business profit for the spending company. Expenditure incurred by Foreign Holding Company for CSR activities in India will qualify as CSR spend of the Indian subsidiary if, the CSR expenditures are routed through Indian subsidiaries and if the Indian subsidiary is required to do so as per section 135 of the Act. The CSR projects or programs or activities that benefit only the employees of the company and their families shall not be considered as CSR activities in accordance with section 135 of the Act. Companies may build CSR capacities of their own personnel as well as those of their implementing agencies through institutions with established track records of at least three financial years but such expenditure shall not exceed 5% of total CSR expenditure of the company in one financial year. Contribution of any amount directly or indirectly to any political party shall not be considered as CSR activity.