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1.  Section 135 of Companies Act, 2013 pertaining to Corporate Social Responsibility (CSR) is applicable to all Companies during the immediately preceding financial year having:

  • Net profit before tax of Rs. 5 Crore or more or
  • Networth of Rs. 500 Crore or more or
  • Turnover of Rs. 1,000 Crore or more

2. In this regard, the Board of Directors of such Companies shall mandatory:

  • Constitute a CSR Committee.
  • Have a CSR Policy for the Company.
  • Ensure that the Company spends, in every financial year atleast 2% of the Average Net Profits of the 3 immediately preceding financial years only in the CSR activities as prescribed under Schedule VII (CSR Rules)


  1. If the Company fails to spent such amounts, it shall transfer the unspent amounts to a fund as specified in the Schedule VII (CSR Rules) within 6 months from the end of financial year.
  2. In case of ongoing CSR project, any unspent amounts to be transferred to a separate bank account within 30 days from the end of financial year.
  • Such amounts to be spent within a period of 3 financial years from the date of such transfer.
  • Failing which, the company shall transfer the same to a fund as specified in the Schedule VII (CSR Rules) within 30 days from the end of the 3rd financial year.

Penalties for Non-compliance:

To the Company:

  • Fine not less than Rs. 50,000/- but which may extend to Rs. 25 lakhs

To every officer of the Company who is in default:

  •  Imprisonment for a term upto 3 years or
  • Fine not less than Rs. 50,000/- but which may extend to Rs. 5 lakhs, or with both.

Author: Rupesh Jain is an Associate at M&K Associates and can be reached at

Disclaimer: The views, information or opinions expressed herein are compiled by the Legal team of M&K Associates, Company Secretaries, Hyderabad. The above information is solely for disseminating knowledge and private circulation. We are hereby not liable for any loss, damage or inconvenience caused as a result of reliance on such information and we accept no legal liability or other responsibility by or on behalf of any errors, omissions, or statements on this content.

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June 2024