Corporate social responsibility accounting in india with emphasis on interpretation of financial thresholds in section 135 (the CSR clause) of the companies act, 2013

Corporate Social Responsibility is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (Triple-Bottom-Line-Approach), while at the same time addressing the expectations of shareholders and stakeholders. In India, Section 135 of The Companies Act, 2013 is a new dawn in the awakening of the corporate social conscience. The sordid saga of concentration of wealth in a few hands lead to this socio legal intervention. The visibly large companies are mandated to spend for greater social causes. It is unfair to believe that they are not at all spending for the betterment of the society. But may not every company spends up to the expectation of the society. This paper attempts to provide deep practical insights into the meaning, determination and interpretation of various kinds of financial thresholds and the kinds of activities covered under the head of CSR mentioned in section 135. The three major financial thresholds are discussed at length. What constitute Net Worth, Turnover and Average Net Profits remains the focal theme of this paper. There prevails a general sense of confusion and ambiguity in interpretation of these thresholds. This paper attempts to bridge the gap in interpretation and bring forth the generally accepted accounting understanding of these threshold limits.