Corporate Social Responsibility | Companies Act 2013 | Section 135

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)

Note:

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 3^rd 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.