After CSR, rules 2014 now MCA has announced new CSR rules which shall be known as Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021.


Rule 2: Definitions

♦ Corporate Social Responsibility (CSR) definition has been revised and instead of activities mentioned in Schedule VII the activities are described in the definition itself. CSR is classified in the following table:

  • CSR means the activities undertaken by a Company in pursuance of its statutory obligation laid down in section 135 of the Act in accordance with the provisions contained in Companies (CSR Policy) Amendment Rules, 2021.
  • Activities undertaken in pursuance of normal course of business of the company engaged in research and development activity of new vaccine, drugs and medical devices in their normal course of business may undertake research and development activity of new vaccine, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22, 2022-23 subject to the conditions that-

(a) such research and development activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act;

(b) details of such activity shall be disclosed separately in the Annual report on CSR included in the Board’s Report;

  • Any activity undertaken by the company outside India for training of Indian sports personnel representing any State or Union territory at national level or India at international level;
  • Activities undertaken in pursuance of normal course of business of the company.
  • Any activity undertaken by the company outside India.
  • Contribution of any amount directly or indirectly to any political party under section 182 of the Act;
  • Activities benefitting employees of the company as defined in clause (k) of section 2 of the Code on Wages, 2019 (29 of 2019);
  • Activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services;
  • Activities carried out for fulfilment of any other statutory obligations under any law in force in India;

♦ “Administrative overheads” means the expenses incurred by the company for ‘general management and administration’ of Corporate Social Responsibility functions in the company but shall not include the expenses directly incurred for the designing, implementation, monitoring, and evaluation of a particular Corporate Social Responsibility project or programme.


In the above definition general management and administration expenditure excludes direct expenses towards particular CSR Project or Programme.

♦ “International Organization” means an organization notified by the Central Government as an international organization under section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act apply.


The Government has allowed the International Organization for designing, monitoring and evaluation of the CSR Project or Programme.

♦ “Ongoing Project” means a multi-year project undertaken by a Company in fulfilment of its CSR obligation having timelines not exceeding three years excluding the financial year in which it was commenced, and shall include such project that was initially not approved as a multi-year project but whose duration has been extended beyond one year by the board based on reasonable justification.

♦ Observation:

As per definition, Ongoing project = Project already commenced + multi-year project whose duration is not less than one year but not exceeding 3 years

♦ “Public Authority” means ‘Public Authority’ as defined in clause (h) of section 2 of the Right to Information Act, 2005

♦ “CSR Policy” means a statement containing the approach and direction given by the board of a company, taking into account the recommendations of its CSR Committee, and includes guiding principles for selection, implementation and monitoring of activities as well as formulation of the annual action plan.

♦ Observation:

In the above definition, a statement shall contain the approach and direction with relation to selection, implementation and monitoring of CSR Project or Programme.

Rule 4: CSR Implementation

♦ The Board shall ensure that the CSR activities are undertaken by the company itself or through –

    • Section 8 Company;
    • Registered Public Trust;
    • Registered Society registered u/s 12A & 80G of Income Tax Act, 1961; or
    • Company with established track record of atleast 3 years.

♦ It shall be noted that the eligible intermediaries through which the company shall undertake the CSR Project or Programme will require registering itself with the Central Government by filing the Form CSR-1 electronically with effect from April 01, 2021.

♦ Further on filing the Form CSR-1 with the Central Government, a unique CSR Registration Number will be generated by the system automatically.

♦ International Organization as defined in Rule 2 of the Rule can also be engaged for designing, monitoring and evaluation of the CSR projects or programmes as per its CSR policy as well as for capacity building of their own personnel for CSR.

♦ Further, it is the responsibility of the Board of the Company to monitor the implementation of ongoing projects and to ensure that the funds are utilized for approved purpose and shall be certified by the Chief Financial Officer (CFO) or Person in charge of finance.

♦ The Board shall have a power to make modifications in such projects to ensure smooth implementation of the project within permissible time limit.

Rule 5: CSR Committees

♦ It shall be noted that the CSR Committee shall formulate and recommend to the Board, an annual action plan in pursuance of its CSR policy, which shall include the following, namely:

  • the list of CSR projects or programmes that are approved to be undertaken in areas or subjects specified in Schedule VII of the Act;
  • the manner of execution of such projects or programmes as specified in sub-rule (1) of Rule 4;
  • the modalities of utilization of funds and implementation schedules for the projects or programmes;
  • monitoring and reporting mechanism for the projects or programmes; and
  • details of need and impact assessment, if any, for the projects undertaken by the company
  • Board may alter such plan at any time during the financial year, as per the recommendation of its CSR Committee.

Rule 7: CSR Expenditure

♦ The board shall ensure that the administrative overheads shall not exceed 5% of total CSR expenditure of the company for the financial year.

♦ Any surplus arising out of CSR activities shall be ploughed back into the same project or shall be transferred to the Unspent CSR Account and spent in pursuance of CSR policy and annual action plan of the company or transfer such surplus amount to a Fund specified in Schedule VII, within a period of 6 months of the expiry of the financial year.

♦ Any excess amount may be set off against the requirement to spend up to immediate succeeding 3 financial years subject to the conditions that;

    • the excess amount available for set off shall not include the surplus arising out of the CSR activities, if any, in pursuance of sub-rule (2) of this rule;
    • the Board of the company shall pass a resolution to that effect.

♦ Any capital asset created by a company prior to the commencement of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, shall within a period of 180 days from such commencement comply with the requirement of this rule, which may be extended by a further period of not more than 90 dayswith the approval of the Board based on reasonable justification.

Amendment to Rule 8: CSR Reporting

♦ Companies with average CSR obligation of 10 Crore or more in the 3 immediately preceding financial yearsshall undertake impact assessment through an independent agency for projects of 1 crore or more which have been completed not less than 1 year before undertaking the impact study.

♦ The impact assessment reports shall be placed before the Board and shall be annexed to the annual report on CSR.

Amendment to Rule 9: Website Disclosure

♦ The Board of Directors of the Company shall mandatorily disclose the composition of the CSR Committee, and CSR Policy and Projects approved by the Board on their website, if any, for public access.

Amendment to Rule 10: Transfer of unspent CSR

♦ Until a fund is specified in Schedule VII for the purposes of sub-section (5) and(6) of section 135 of the Act, the unspent CSR amount, if any, shall be transferred by the company to any fund included in schedule VII of the Act.

♦ New format inserted for disclosure of ‘Annual Report on CSR activities’ to be included in the Board’s Report.


♦ Besides this, companies undertaking CSR activities will have to share.

♦ Impact Assessment for big CSR projects.

♦ Carry forward and set off of CSR expenditure.

♦ Annual action plan for CSR by Board every year in addition to CSR policy.

♦ Tweaks in reporting formats of Board Report.

♦ Mandatory disclosure of CSR projects and activities on company website.

♦ Capital Asset acquisition and its holding restricted to three bodies broadly.

♦ Transfer of unspent amount to government notified fund.

♦ In the event of the company failing to spend the earmarked two percent of net profits towards CSR, it will “have to specify the reasons for not spending the amount” and, unless the unspent amount relates to any ongoing project, transfer it to a government notified fund.

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March 2021