Some Changes Made To Clarify CSR Expenditure Norms

• The Ministry of Corporate Affairs has amended the Companies (Corporate Social Responsibility Policy) Rules, 2014
• Clarification issued with respect to the nature of expenditure to be incurred for CSR activities
• CSR expenditure to include spending on administrative overheads as well within the 5% cap

BACKGROUND

Recently, the Ministry of Corporate Affairs ("MCA") made changes to the expenditure norms on CSR activities by amending the Companies (Corporate Social Responsibility Policy) Rules, 2014 ("CSR Rules") by further clarifying the nature of expenditure that can be undertaken by companies to build their CSR capabilities. While the CSR Rules, as notified on 27.02.2014¹, allowed companies to build CSR capabilities of their personnel as well as those of their implementing agencies through institutions with an established track records of at least three (3) financial years, such expenditure were capped at five per cent. (5%) of the CSR expenditure of the