CSR Expenditure

1. The Board of every company shall ensure that every company spends, in every financial year, at least two percent of the average net profits of the company made during the three  immediately preceding the financial years, in pursuance of its CSR policy. This amount will be its CSR expenditure.
2. If the company fails to spend such amount, the board shall, in its report specify the reason for not spending the amount.
3. The company shall preference to local areas and areas around it where it operates for spending the amount earmarked for the CSR activities.
4. Expenditure incurred on specified activities that are carried out in India only will qualify as CSR expenditure. Such expenditure includes contribution to the corpus or on projects or programs relating to CSR activities.
5. Any surplus arising out of CSR activities will not be considered as business profit for the spending company.