Companies (CSR Policy) Amendment Rules, 2022 came into force to amend few sub-rules of Companies (Corporate Social Responsibility Policy) Rules, 2014. They shall come into force on the date of their publication in Official Gazette that is 20th September, 2022. Majorly, it covers five amendments:

1. If the company has any amount in Unspent Corporate Social Responsibility Account, then it shall constitute a CSR Committee and comply with sub-sections (2) to (6) of Sec. 135 of Companies Act, 2013. This is more so important for the companies who have previously not formed the Committee because of contribution do not exceed Rupees Fifty Lacs.

2. Rule 4(1) got amended. Previously, the CSR activities were allowed to be undertaken “by the company itself or through (a) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961 (43 of 1961)…” Now, an additional requisite is added which says that for a Section 8 company or a registered trust or a registered society, it should be exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 or registered under section 12A and approved under Section 80G of the Income Tax Act, 1961 (43 of 1961). 

3. Rule 8 mentions about CSR Reporting in Board’s Report and mandatory Impact Assessment if CSR obligation exceeds the threshold limit. Sub-Rule 1(c) was amended from 5% to 2%. This means that expenditure towards Impact Assessment was previously allowed up to 5% or 50 lac whichever is less for the purpose of CSR. But now, the allowance is minimum Rs. 50 lac and maximum up to 2% of total CSR expenditure.

4. Format of reporting about CSR obligations in Board’s Report has slightly changed. For example executive summary along with web-link of Impact Assessment of CSR projects was not required but now it is mandatory.

5. First point of CSR-1 form to be filed by implementing agency has changed based upon the language in rule 4(1).

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5 Comments

  1. Santosh says:

    Thanks Bhavya for the articulating it nicely. Limit of exp in Rule 8 is confusing. I read the amended rule and it is now higher of 50 L and 2% which means if 2% is lower than 50 L, then co can spend up to 50 L.

    1. Bhavya Taneja says:

      Sir,
      Thank you for the kind words. As per our view, your interpretation is correct. Previously, ‘whichever is less’ was mentioned but now ‘whichever is higher’ is allowed. Hence, company can book 50 lac as expenditure on Impact Assessment if 2% is less than 50 lac.

  2. CA Vivek K Barlota says:

    Sir, Is there any formality for renewal of CSR registration number for trust. Our trust already have CSR registration number. Please guide us.

    1. Bhavya Taneja says:

      Sir, an additional way is added in the Rules for implementing agency. In our opinion, it has nothing to do with fresh form filing. However for better clarity, you may try to pre-fill e-form CSR- with requisite details. The error would automatically reflect if it is not required to be filed.

    2. Bhavya Taneja says:

      Sir,
      Thank you for the kind words. As per our view, your interpretation is correct. Previously, ‘whichever is less’ was mentioned but now ‘whichever is higher’ is allowed. Hence, company can book 50 lac as expenditure on Impact Assessment if 2% is less than 50 lac.

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