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      Question

      A listed company has an average net profit of Rs. 12

      crore in the last 3 years. As per Section 135 of the Companies Act, 2013, which of the following statements is correct regarding CSR obligation?
      A No CSR spending required since net profit is below Rs. 15 crore. Correct Answer Incorrect Answer
      B CSR expenditure of at least 2% of average net profit (Rs. 24 lakhs) is mandatory. Correct Answer Incorrect Answer
      C CSR is voluntary for all companies irrespective of thresholds. Correct Answer Incorrect Answer
      D CSR expenditure must be exactly 5% of profit. Correct Answer Incorrect Answer
      E CSR applies only if company is a public sector undertaking. Correct Answer Incorrect Answer

      Solution

      CSR applies if net worth ≥ 500 cr, turnover ≥ 1,000 cr, or net profit ≥ 5 cr. Here, profit exceeds 5 cr, so 2% of average net profit (24 lakh) must be spent.

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