As per Section 135 read with Rule 2 of The Companies (CSR Policy) Rule, 2014:
“Net profit” means the net profit of a company as per its financial statement prepared in accordance with the applicable provisions of the Act, but shall not include the following, namely:-
(i) any profit arising from any overseas branch or branches of the company, whether operated as a separate company or otherwise; and
(ii) any dividend received from other companies in India, which are covered under and complying with the provisions of section 135 of the Act: Provided that in case of a foreign company covered under these rules, net profit means the net profit of such company as per profit and loss account prepared in terms of clause (a) of sub-section (1) of section 381, read with section 198 of the Act;
In my opinion, we should consider Profit After Tax of Preceeding FY for checking applicability of CSR. However, while computing the expenditure spent on CSR, the 2% of the average profit is calculated on Profit before tax.
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As per the CSR provisions, the 2% of the average profit is calculated as profit before tax will be calculated.