Computation of net profit for section 135 is as per section 198 of the Companies Act, 2013 which is primarily PROFIT BEFORE TAX (PBT). Is it implying to the current financial … 21 of 2014 dated 18-06-2014, General Circular No. To disclose composition of CSR Committee in its reports.
If we see the provision of the Act, it is silent on penalty in case of default. We have not yet compiled the Figures for Dec 31,2013 but in Dec 2012 we have crossed the profits of 5 crores. General Circular No. The rules give a help to come out of CSR net. but applicability is silent on net profit after or before tax.. pl clarifythanks! Section 135 of the Companies Act, 2013 is applicable to every company registered under the Act, and any other previous Companies Law, with a net worth of Rs 500 crore or more, or a turnover of over Rs 1,000 crore or a net profit exceeding Rs 5 crore in any financial year. Can this expense be treated as an overhead expense under CSR i.e.
135. ?Sir, Please clarify why we need to check the last three years financials and not only the Financials immediately preceding April 1, 2014, as the three year finacials are required only for computation of the 2% spending which is an average of the last 3 years profits. the net profit based applicability – it is net profit “during any financial year” and CSR exps says 2% spends is on average net profit.
5. Net profit INR 50 million or more Rule 2(f) of the CSR Rules: “Net profit” means the net profit of a company as per its financial statement prepared in accordance with the applicable provisions of the Act, but shall not include the following, namely: any profit arising from any overseas branch or branches
Corporate Social Responsibility (1) Every company having net worth of rupees five hundred crore or more, orturnover of rupees one thousand crore or more or a net profit of rupees five crore or more.
Does that mean we have to comply with the provisions of CSR immediately?You may have some provisional figure. These threshold limits are:Net worth rupees five hundred crore or more (Rs.
The Section does not make difference between private or private companies. But it is the other way round and PBT or Profit Before Tax has to be taken into account for calculation of CSR amount.
In this Articles we discusses CSR Provisions and CSR Applicability for Corporates.Section 135(1) of Company Act 2013 mandates the CSR expenditure / CSR Applicability for the following companies– Every company havingWhere net profit excludes income from overseas branch & divided distributed by company on which this section apply.– If any company on which CSR provisions were applicable cease to come in above criteria for consecutive three years , they are not required to follow the provision of CSRSection 135(5) mandates 2 percent of the Average net profit during the three immediately preceding financial years.For Financial Year 2014-15 Calculation: Average net profit of FY 2011-12,2012-13 & 2013-14 needed to be considered.Average Net Profit is calculated as per section 198 i.e. Section 135(1) read with rule 3(2) denote where a company has fulfilled any of these three criteria during any of last three consecutive financial years should comply with CSR law. but applicability is silent on net profit after or before tax.. pl clarify Net Profit Considered for CSR Spending.
Turnover of the company is Rs. As per Section 198 (5) (a), income-tax and super-tax payable by the company under the Income Tax Act, 1961, “shall not” be deducted while arriving at net profit under the section. Sorry, your blog cannot share posts by email. Explanation to sub – section (5) of 135 hints that “average net profit” shall be calculated in accordance with the provisions of Section 198. To approve the CSR Policy after considering recommendations of the CSR … definition given is for average net profit for previous 3 year which is before tax. What steps Company can take now ?You pls provide your suggestion/view for this Companies.Fill in your details below or click an icon to log in:Subscribe on WhatsApp; Send a WhatsApp message “Subscribe AishMGhrana” to +91 96503 38103
Applicability: Section 135 of the Companies Act 2013 provides the threshold limit for applicability of the CSR to a Company: (a) net worth of the company to be Rs 500 crore or more; or (b) turnover of the company to be Rs 1000 crore or more; or (c) net profit of the company to be Rs 5 crore or more. There should not be any confusion as the Act is quite clear regarding this. urgentSection was applicable from FY 14-15 , as profit for FY 12-13 exceeds 5 crore..
The company shall give preference to the local area for spending the amount for CSR Activity. In order to submit a comment to this post, please write this code along with your comment: Join our newsletter to stay updated on Taxation and Corporate Law. The Act clearly says that in pursuance of its Corporate Social Responsibility (CSR) Policy, “The Board of every company covered under Section 135, shall ensure that the company spends, in every financial year, at least two per cent (2%) of the average ‘Net Profits’ of the company made during the three immediately preceding financial years”.The Act uses the term ‘Net Profits’ in the provision and this can mean that PAT or Profit After Tax may be used for calculating CSR amount.
w.r.t. For the purpose of threshold limit of applicability of CSR Law, we may take help of Section 198.Net profit for CSR shall be calculated from the net profit calculated as per section 198.In case of foreign company; proviso to sub – rule (1) of Rule 3 say; net worth, turnover or net profit of a foreign company shall be computed in accordance with balance sheet and profit and loss account of such company prepared in accordance with the provisions of clause (a) of sub – section (1) of Section 381 and Section 198 of the Act.Section 135 is silent regarding ceasing of applicability of the CSR law on a company which cease to fulfil the criteria set out in sub – section (1).
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