The structure for social welfare spending under the new companies law is "absolutely well drafted" allowing corporates to spend money towards CSR activities without any ambiguity, government said today.

The heads under which CSR spend has to be made have been well defined and the spending can be done in a clear way without any ambiguity, Minister of State for Corporate Affairs Nirmala Sitharaman said.

"Under the law the structure for spending on CSR activities is absolutely well drafted," she said at an event organised here by Indian Social Responsibility Network.

In a first of its kind, certain class of companies are required to shell out at least 2 per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities under the Companies Act, 2013.

CSR norms, which came into effect from April 1, are applicable to companies having at least Rs 5 crore net profit, or Rs 1,000 crore turnover or Rs 500 crore net worth.
Such companies would need to spend 2 per cent of their 3-year average annual net profit on CSR activities in each financial year, beginning 2014-15 fiscal.

Even though it has not been even an year since the CSR norms came into effect, Sitharaman said she was sure "there is a lot of traction" already gained in terms of what companies have to do towards such activities.

In response to a query on whether Swachh Bharat Abhiyan would also be included in CSR rules, the minister said that various heads (for social welfare spending) have already been defined by the law.

"With Prime Minister's emphasis on Swachh Bharat Abhiyan ...it is up to the corporates on whether to join. The law has clearly stated the heads on which CSR spend has to be done," she said.

The CSR ambit includes livelihood enhancement and rural development projects, working towards protection of national heritage, art and culture, including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts.