The government today said it has finalised the corporate social responsibility (CSR) guidelines for public sector units, under which they will have to earmark a portion of their profit for social activities.
In a written reply to the Rajya Sabha, Heavy Industries and Public Enterprises Minister Praful Patel said that the revised guidelines on CSR and sustainability would come into effect from April, 2013.
As per the guidelines, "the financial component/budgetary spend on CSR and sustainability will be based on the profitability of the company and shall be determined by the profit after tax (PAT) of the company in the previous year".
If the PSU firm's PAT in the previous year is less than Rs 100 crore, the range of the budgetary allocation for CSR and sustainability activities would be 3-5 per cent and if the PAT is between Rs 100 crore and Rs 500 crore, it will be 2-3 per cent.
For the public sector unit whose PAT in the previous year is Rs 500 crore and above, the range of the budgetary allocation for CSR and sustainability activities would be 1-2 per cent, it said.
It said that loss making companies are not mandated to earmark specific funding for CSR activities.
"However, they must pursue CSR and sustainability policies by integrating them with their business plans, strategies and processes, which do not involve any financial expenditure," the guidelines said, adding the PSUs are required to have a policy approved by their respective boards of directors.
As per the guidelines, the unutilised budget for CSR activities planned for a year will not lapse and will instead be carried forward to the next year, it said, adding, "however, the CPSEs will have to disclose the reasons for not fully utilising the budget allocated".
Further, it said that it is mandatory for CPSEs to take up at least one major project for development of a backward district as identified by the Planning Commission for its backward region grant fund scheme and one major project for environment sustainability.
"Five per cent of the annual budget for CSR and sustainability activities has to be earmarked for emergency needs, which include relief work undertaken during natural calamities," it said.