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136 BUSINESS  STUDIES In India, the concept of CSR is governed by Clause 135 of the Companies Act, 2013, which was passed by both the Houses of the Parliament, and had received the assent of the President of India on 23 August 2013. The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore and more, or a net worth of Rs. 500 crore and more, or a net profit of Rs. 5 crore and more. 1. The new rules, which are applicable from the fiscal year 2014-15 onwards, also require companies to setup a CSR committee consisting of their board members, including at least one independent director. 2. The Act encourages companies to spend at 2% of their average net profit in the previous three years on CSR activities. 3. The indicative activities, which can be undertaken by a company under CSR, have been specified under Schedule VII of the Act. 4. Only CSR activities undertaken in India will be taken into consideration. 5. Activities meant exclusively for employees and their families will not qualify under CSR. only social responsibility is towards itsonly through continuous service to owners. Some others, however, hold an society. Thus, assumption of social opposite view and argue that the firm responsibility by business provides has a social responsibility to serve all justifications for its existence and sections of society who are affected by growth. its decisions and actions. It would be (ii) Long-term interest of the firm: useful to understand the arguments A firm and its image stands to gain offeredbothinfavourofandagainstthe maximum profits in the long run when assumption of social responsibilities by business. it has its highest goal as ‘service to society’. When increasing number of members of society — including 6.3.1 Arguments for Social Responsibility workers, consumers, shareholders, government officials, feel that business (i) Justification for existence and enterprise is not serving its best growth: Business exists for providing goods and services to satisfy human interest, they will tend to withdraw their cooperation to the enterprise needs. Though, profit motive is an important justification for undertaking concerned. Therefore, it is in its own business activity, it should be looked interest if a firm fulfills its social upon as an outcome of service to responsibility. The public image of any the people. In fact, the prosperity firm would also be improved when it and growth of business is possible supports social goals. Reprint 2026-27