If a Company has not earned 5 Cr. profit this year but was having profit of 5 Cr. or more during last 2 years then whether the Company has to spend towards CSR? It does not fall under other two criteria of net worth or turnover. pl. suppoet your answer with valid reasons.
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Csr expenditure
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Yes company should spend at least 2% of average net profit for the immediate preceding 3 Financial year in CSR.
For example if company earned profit or loss:
6Crore NP in 2015 - 2016
5 Crore NP in 2016 - 2017
(3) Crore Loss in 2017- 2018 FY
Then we need to calculate average of immediate preceding 3 FY.
6+5-3= 8 Crore
8/3= 26,666,666.7 (Average Net Profit of preceding 3 FY)
CSR Expenditure will be minimum 2% of 26,666,666.7
To comply we should check last 3 years Profit/ Turn over / Net worth. Not only for current financial year.
For example if company earned profit or loss:
6Crore NP in 2015 - 2016
5 Crore NP in 2016 - 2017
(3) Crore Loss in 2017- 2018 FY
Then we need to calculate average of immediate preceding 3 FY.
6+5-3= 8 Crore
8/3= 26,666,666.7 (Average Net Profit of preceding 3 FY)
CSR Expenditure will be minimum 2% of 26,666,666.7
To comply we should check last 3 years Profit/ Turn over / Net worth. Not only for current financial year.
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