CSR Applicability based on 20-21 profit

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This discussion clarifies CSR applicability for companies whose profit before tax (PBT) fell below Rs 5 crore in FY 20-21, despite exceeding it in previous years. It confirms that CSR obligations are generally assessed based on the average profit of the last three financial years. Therefore, if the 3-year average PBT remains above Rs 5 crore, CSR will still be applicable, even if a single year's profit is lower. However, if the average profit falls below the threshold, CSR may not be applicable for the subsequent financial year.

Renjith.R.s.

Renjith.R.s. (Querist)
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02 September 2021 Company is having PBT more than Rs 5 cr up to FY 19-20. But during 20-21 company's PBT is less than-
Rs 5cr.

Company is not qualifying for CSR under other criteria of net worth and Turn over.

Is it company have qualify for CSR applicability based on 20-21 PBT ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 September 2021 20-21 profit is less than 5 crore CSR not applicable for 21-22.

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Renjith.R.s.

Renjith.R.s. (Querist)
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02 September 2021 Thanks sir..........

Renjith.R.s.

Renjith.R.s. (Querist)
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02 September 2021 Dear Sir,

Any provision in companies act, once CSR provision applicable to any company they have to continue for 3 years irrespective turnover falls below Rs 5cr during any FY?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 September 2021 Companies are expected to spend 2% of the average profit of the last 3 years – hence, even for two consecutive years if the company has been in loss, but on an average, the company has been in profit since the last 3 years, then the company would be required to spend 2% of the average profit on the stipulated CSR ...

Renjith.R.s.

Renjith.R.s. (Querist)
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02 September 2021 Thanks... request for small confirmation also for better clarity.
PBT
17-18 - Rs 3.5 Cr
18-19 - Rs 7 Cr
19-20 - Rs 23 lakhs
Avg for three years is Rs 3.57 cr. For FY 20-21 CSR is applicable based on this average and profitability of 19-20 alone?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 September 2021 For FY 20-21 CSR is applicable based on the average.

Renjith.R.s.

Renjith.R.s. (Querist)
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02 September 2021 Thanks sir...............