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)

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)

02 September 2021 20-21 profit is less than 5 crore CSR not applicable for 21-22.

Message likes : 1 times

Renjith.R.s.

Renjith.R.s. (Querist)

02 September 2021 Thanks sir..........

Renjith.R.s.

Renjith.R.s. (Querist)

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)

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)

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)

02 September 2021 For FY 20-21 CSR is applicable based on the average.

Renjith.R.s.

Renjith.R.s. (Querist)

02 September 2021 Thanks sir...............