The Corporate Social Responsibility (CSR) provisions are governed under Section 135 of the Companies act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 (Rules) and Schedule VII thereto.

The Rules, which were last amended by the Ministry of Corporate Affairs (“MCA”) in January, 2021, have been amended by the MCA vide notification dated September 20, 2022.

The amendments to the Rules are provided below for your reference:

1. Insertion of new proviso after the proviso to sub-rule 1 of Rule 3:

Provided further that a company having any amount in its Unspent Corporate Social Responsibility Account as per sub-section (6) of section 135 shall constitute a CSR Committee and comply with the provisions contained in sub-sections (2) to (6) of the said section.

As per the amended Rules, constitution of a CSR Committee is mandatory where the Company has any amount in its Unspent CSR Account in terms of the provisions of Section 135(6) of the Act i.e., if the Company has any extant ongoing project, it is mandatorily required to constitute a CSR Committee.

Further, such company shall also comply with the provisions of Section 135(2) to Section 135(6) of the Act.

2. Omission of sub-rule 2 of Rule 3:

Every company which ceases to be a company covered under sub-section (1) of section 135 of the Act for three consecutive financial years shall not be required to –

1. constitute a CSR Committee; and

2. comply with the provisions contained in sub-section (2) to (6) sub-section (2) to (5) of the said section, till such time it meets the criteria specified in sub-section (1) of section 135.

As per the earlier provisions, the CSR provisions ceased to be applicable on a company when it ceased to meet the criteria as specified as Section 135(1) for three consecutive financial years.

Under the new Rules, this provision has been dispensed with. Once the CSR provisions become applicable on a company, they will continue to be applicable.

3. Substitution of sub-rule 1 of Rule 4:

The Board shall ensure that the CSR activities are 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), established by the company, either singly or along with any other company, or

b. a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or

c. any entity established under an Act of Parliament or a State legislature; or

d. a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.

The Board shall ensure that the CSR activities are 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, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 or registered under section 12A and approved under 80 G of the Income Tax Act, 1961 (43 of 1961), established by the company, either singly or along with any other company; or

b) a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or

c) any entity established under an Act of Parliament or a State legislature; or

d) a company established under section 8 of the Act, or a registered public trust or a registered society, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 or registered under section 12A and approved under 80 G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.

Explanation- For the purpose of clause (c), the term “entity” shall mean a statutory body constituted under an Act of Parliament or State legislature to undertake activities covered in Schedule VII of the Act.

Earlier, only those companies established under the provisions of Section 8 of the Act, or registered public trusts or registered societies who were registered under Sections 12A and 80 G of the Income Tax Act, 1961 were eligible under the said rule. Now, the scope has been widened to include those companies established under section 8 of the Act, or registered public trusts or registered societies which are exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 or registered under section 12A and approved under 80 G of the Income Tax Act, 1961.

The word “entities” has also been defined by way of an explanation.

4. Amendment in clause c of sub-rule 3 of Rule 8:

 A Company undertaking impact assessment may book the expenditure towards Corporate Social Responsibility for that financial year, which shall not exceed two percent five percent of the total CSR expenditure for that financial year or fifty lakh rupees, whichever is higher whichever is less.

Companies were allowed to book expenditure on undertaking impact assessment up to 5% of the total CSR expenditure for that financial year or Rs. 50 Lakhs, whichever was less.

Now, companies can book expenditure on undertaking impact assessment up to 2% of the total CSR expenditure for that financial year or Rs. 50 Lakhs, whichever is higher.

5. Amendment in format for the annual report on CSR activities to be included in the board’s report of a company.

The same is represented below for reference:

Companies (CSR Policy) Amendment Rules, 2022 - Detailed Analysis

ANNEXURE -II

FORMAT FOR THE ANNUAL REPORT ON CSR ACTIVITIES TO BE INCLUDED IN THE BOARD’S REPORT FOR FINANCIAL YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2020

1. Brief outline on CSR Policy of the Company:

2. Composition of CSR Committee:

Sr. No. Name of Director Designation / Nature of Directorship Number of meetings of CSR Committee held during the year Number of meetings of CSR Committee attended during the year

3. Provide the web-link(s) where Composition of CSR Committee, CSR Policy and CSR Projects approved by the board are disclosed on the website of the company.

4. Provide the executive summary along with web-link(s) of Impact Assessment of CSR Projects carried out in pursuance of sub-rule (3) of rule 8, if applicable.

5. (a) Average net profit of the company as per sub-section (5) of section 135.

(b) Two percent of average net profit of the company as per sub-section (5) of section 135. (c) Surplus arising out of the CSR Projects or programmes or activities of the previous financial years.

(d) Amount required to be set-off for the financial year, if any.

(e) Total CSR obligation for the financial year [(b)+(c)-(d)].

6. (a) Amount spent on CSR Projects (both Ongoing Project and other than Ongoing Project). (b) Amount spent in Administrative Overheads.

(c) Amount spent on Impact Assessment, if applicable.

(d) Total amount spent for the Financial Year [(a)+(b)+(c)].

(e) CSR amount spent or unspent for the Financial Year:

Total Amount Spent for the Financial Year. (in Rs.) Amount Unspent (in Rs.)
Total Amount transferred to Unspent CSR Account as per subsection (6) of section 135. Amount transferred to any fund specified under Schedule VII as per second proviso to sub-section (5) of section 135.
Amount. Date of transfer. Name of the Fund Amount. Date of transfer.

(f) Excess amount for set-off, if any:

Sr. No. Particulars Amount

(in Rs.)

(1) (2) (3)
(i) Two percent of average net profit of the company as per sub-section (5) of section 135
(ii) Total amount spent for the Financial Year
(iii) Excess amount spent for the Financial Year [(ii)-(i)]
(iv) Surplus arising out of the CSR projects or programmes or activities of the previous Financial Years, if any
(v) Amount available for set off in succeeding Financial Years [(iii)-(iv)]

7. Details of Unspent Corporate Social Responsibility amount for the preceding three Financial Years:

1 2 3 4 5 6 7 8
Sl. No. Preceding Financial Year(s) Amount transferred to Unspent CSR Account under sub-section (6) of section 135 (in Rs.) Balance Amount in Unspent CSR Account under sub-section (6) of section 135 (in Rs.) Amount Spent in the Financial Year (in Rs) Amount transferred to a Fund as specified under Schedule VII as per  second proviso to subsection (5) of section 135, if any Amount remaining to be spent in  succ eeding Financial Years (in Rs) Deficie ncy, if any
Amount (in Rs) Date of Transfer
1 FY-1
2 FY-2
3 FY-3

8. Whether any capital assets have been created or acquired through Corporate Social Responsibility amount spent in the Financial Year:

Yes    No

If Yes, enter the number of Capital assets created/ acquired

Furnish the details relating to such asset(s) so created or acquired through Corporate Social Responsibility amount spent in the Financial Year:

Sl. No. Short particulars of the property or asset(s) [including complete address and location of the property] Pincode of the property or asset(s) Date of creation Amount of CSR amount spent Details of entity/ Authority/ beneficiary of the registered owner
(1) (2) (3) (4) (5) (6)
CSR Registration Number, if applicable Name Registered Address

(All the fields should be captured as appearing in the revenue record, flat no, house no, Municipal Office/Municipal Corporation/ Gram panchayat are to be specified and also the area of the immovable property as well as boundaries)

9. Specify the reason(s), if the company has failed to spend two per cent of the average net profit as per subsection (5) of section 135.

Sd/-

(Chief Executive Officer or Managing Director or Director).

Sd/-

(Chairman CSR Committee).

Sd/-

[Person specified under clause (d) of subsection (1) of section 380] (Wherever applicable).

6. Substitution for Sr. No. 1 and the entries relating thereto in the e-form CSR–1:

“1. *Nature of the entity:

  • Company established under section 8, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 and approved under section 80G of the Income Tax Act, 1961.
  • Company established under section 8, registered under section 12A and approved under section 80G of the Income Tax Act, 1961.
  • Registered public trust, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 and approved under section 80G of the Income Tax Act, 1961.
  • Registered public trust, registered under section 12A and approved under section 80G of the Income Tax Act, 1961.
  • Registered society, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 and approved under section 80G of the Income Tax Act, 1961.
  • Registered society, registered under section 12A and approved under section 80G of the Income Tax Act, 1961.
  • Company established under section 8 or registered Trust or registered Society established by the Central Government or State Government.
  • Entity established under an Act of Parliament or State Legislature.”

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