With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements: 1. CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities. 2. CSR rules do not specify minimum spending on CSR activities. Which of the statements given above is/are correct?

Answer: A. Only Statement 1 is correct. CSR is governed by Section 135 of the Companies Act 2013 and the Companies (CSR Policy) Rules 2014. Statement 1 is CORRECT. The CSR Rules expressly exclude activities benefiting only employees of the company and their families from being counted as CSR. Activities that benefit only the company itself (e.g. brand promotion) are also excluded. Schedule VII lists permitted CSR activities (community education, healthcare, environmental work, etc.). Statement 2 is WRONG. The Companies Act mandates that companies meeting thresholds (net worth Rs. 500 cr / turnover Rs. 1000 cr / net profit Rs. 5 cr) must spend AT LEAST 2% of average net profits of the preceding three financial years on CSR. So minimum spending IS specified. Source: Companies Act 2013 Section 135 + Companies (CSR Policy) Rules 2014.