According to the companies act, 2013 firms are required to spend 2% of average net profit of the preceding three years on corporate social responsibility activities. The inclusion of CSR is an attempt by the government to engage the businesses with the national development agenda. The details of on corporate social responsibility are mentioned in the Section 135 of the Companies Act, 2013. The Act came into force from April 1, 2014, every company, private limited or public limited, which either has a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or net profit of Rs 5 crore, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on Corporate social responsibility activities. The CSR activities in India should not be undertaken in the normal course of business and must be with respect to any of the activities mentioned in Schedule VII of the act. These include initiatives that would have social, economic and environmental impact or a way to give back to the society, such as promoting gender equality, empowering women, promoting education, eradicating hunger, poverty, malnutrition, rural development projects, conserving natural resources, among others. Till now, companies were allowed to provide CSR funds to technology incubators located within Centre-approved academic institutions.
Now Government has expanded the scope of corporate spend under Corporate Social Responsibility (CSR) norms vide gazette Notification No. 602, Dated 11.10.2019 and companies can now contribute towards research across various fields such as science, technology, medicine. Besides, CSR fund can be spent on incubators funded by the Centre or state or any state-owned companies. This is expected to attract more funds on research and development in the country. “Now CSR 2% fund can be spent on incubators funded by central or state government or any agency or public sector undertaking of central or state government, and, making contributions to public funded universities, IITs, national laboratories and autonomous bodies (established under the auspices of ICAR, ICMR, CSIR, DAE, DRDO, DST, Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting SDGs (sustainable development goals)" .