The law under which companies are required to spend two per cent of their profit towards CSR activities provides an "excellent legal framework" to create a bridge between society and corporates, Commerce and Industry Minister Suresh Prabhu today said.
Under the Companies Act, 2013, certain class of profitable entities are required to shell out at least two per cent of their three-year annual average net profit towards corporate social responsibility (CSR) activities. He said that India is probably the only country in the world with such a framework.
Corporates that are spending two per cent in CSR activities win goodwill for the industry and "no corporate can ever do good business if it does not enjoy the goodwill of the society," he said here at a function on 'promoting scientific interventions for transforming India through CSR'.
He, however, added that this a challenge for businesses to engage in social development activities. In 2016-17, as many as 6,286 companies incurred CSR expenditure of Rs 4,719 crore, as per official data.