New Delhi: The government has toned down on corporate social responsibility (CSR) by removing the clause which makes it mandatory for all companies to spend about 2 percent of their profit on CSR. The revised bill has proposed that all companies only require having a policy that targets to spend 2 percent of its profit on CSR. Although the company is demanded to produce the details of the money spent for the social causes reports Souvik Sanyal and Deepshikha Sikarwar for The Economic Times.

"Companies will have to have a policy as to how they will spend 2 percent of their profit on CSR and there must be a disclosure if the money has been spent,"Corporate Affairs Minister Salman Khurshid. "You can say it is not entirely voluntary, might say it is not mandatory. It is in between somewhere."

The government had suggested that it could ask companies having a minimum net worth of 500 crore, or an annual turnover of 1,000 crore, or a net profit of 5 crore in a year to spend at least 2 percent of their average net profit during the three preceding fiscals on CSR.

Confederation of Indian Industry had demanded that the new law should not specify an amount to be spent on CSR, and that a decision on the actual spend be left to company boards. But central public sector enterprises have a policy that requires them to spend 0.5-5 percent of their net profit on CSR activities.

"To say that you will protect your labour force with proper equipment and proper clothing is not CSR," he said. "But giving people of the area similar equipment because they are living in an inherently dangerous area may be orporate social responsibility."

"You have to draw a line between charity, philanthropy and CSR," Khurshid said. "There can be business without charity. There can be charity without business. But there can be no business without orporate social responsibility."