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?

As per Section 135(1) of the Companies Act, 2013, read with the Companies (CSR Policy) Rules, 2014, certain companies are required to comply with CSR provisions if they meet any of the following criteria during the immediately preceding financial year: (i) Net worth of rupees five hundred crore or more, or (ii) Turnover of rupees one thousand crore or more, or (iii) Net profit of rupees five crore or more.

Section 135 mandates that companies meeting the above criteria must allocate at least 2% of their average net profits from the preceding three financial years towards CSR activities. Hence, statement 2 is incorrect.

According to the Companies (CSR Policy) Rules, 2014, any activity benefiting employees of the company is not considered an eligible CSR activity. Any activity designed exclusively for the benefit of employees shall be considered an “activity benefiting employees” and will not qualify as permissible CSR expenditure. Hence, statement 1 is correct.

Statement 1 is correct. Statement 2 is incorrect. Therefore, only statement 1 is correct.