“What Corporations do to society is far more important than what Corporations can do for Society”- Peter Druker.

CORPORATE SOCIAL RESPONSIBILITY (CSR), can be defined as a Company’s sense of responsibility towards the environment and community in which it operates. The main purpose of CSR is to give back to the Community, take part in the Philanthropic causes, and provide positive social value.

CSR requires Companies to acknowledge that they should be publicly accountable not only for their financial performance but also for their social and environmental record.


Section/Rules/SEBI LODR Contents
134(3)(o) Disclosures in Board’s Report about the detail policy developed and implemented by the Company on   Corporate Social Responsibility initiatives taken during the year
134(8) Penalty relating to non-compliance of Section 143(3)(o)
135 (1) Applicability of Corporate Social Responsibility
135 (1) Composition of CSR Committee
135(2) Disclosures to be made about CSR committee composition in Boards Report
135(3) Role of CSR Committee
135(4) About CSR Policy
135(5) CSR Expenditure limit
135(6) Detail of unspent amount
135(7) Penalty for contravention of section 135(5) and 135 (6)
135(8) General or special directions can be provided by Central Government as it considers necessary to ensure compliance of provisions of this sections.
135(9) Non-applicability of CSR Committee
Schedule VII Activities in which CSR investment can be made
Rule 2(1)(d) Definition of CSR
Rule 2(1)(e) CSR committee
Rule 2(1)(f)(g)(h) CSR Policy, Net Profit and Ongoing Project
Rule 3 Applicability
Rule 4 CSR Implementation
Rule 5 CSR Committee
Rule 6 Omitted
Rule 7 CSR Expenditure
Rule 8 CSR Reporting
Rule 9 Website Disclosure
Rule 10 Transfer of unspent amount


Every Company (including foreign company) having

As per Section 135(9):- Constitution of CSR Committee

Where the amount to be spent by a company under sub-section (5) does not exceed fifty lakh rupees, the requirement under sub-section (1) for constitution of the Corporate Social Responsibility Committee shall not be applicable and the functions of such Committee provided under this section shall, in such cases, be discharged by the Board of Directors of such company.”.

Came into effect from 1ST APRIL 2021.


  • A Company’s holding or Subsidiary, which satisfies the above criteria, will also have to constitute CSR Committee.
  • Every Foreign Company having its branch office or project office in India, satisfying the above criteria will have to constitute the Committee.


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. 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


Means the net profit of the Company as per its financial statement prepared in accordance with the applicable provisions of the Act, but shall not include the following namely:

i. Any profit arising from any overseas branch or branches of the Company, whether operated as a separate Company or otherwise and.

ii. Any dividend received from other Companies in India, which are covered under and complying with the provisions of Section 135 of the Act:

Provided that in case of a foreign Company covered under these rules, net profit means the net profit of such company as per profit and loss account prepared in terms of clause (a) of sub-section (1) of Section 381, read with section 198 of the Act.


Means a statement containing the approach and direction given by the Board of a Company, taken 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


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


i. Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water.

ii. Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.

iii. Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

iv. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water [including contribution to the Clean Ganga Fund]

v. Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;

vi. Measures for the benefit of armed forces veterans, war widows and their dependents, Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows

vii. Training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports

viii. Contribution to the prime minister’s national relief fund or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)] or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women;

ix. (a) Contribution to incubators or research and development projects in the field of science, technology, engineering and medicine, funded by the Central Government or State Government or Public Sector Undertaking or any agency of the Central Government or State Government; and

(b) Contributions to public funded Universities; Indian Institute of Technology (IITs); National Laboratories and autonomous bodies established under Department of Atomic Energy (DAE); Department of Biotechnology (DBT); Department of Science and Technology (DST); Department of Pharmaceuticals; Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH); Ministry of Electronics and Information Technology and other bodies, namely Defense Research and Development Organization (DRDO); Indian Council of Agricultural Research (ICAR); Indian Council of Medical Research (ICMR) and Council of Scientific and Industrial Research (CSIR), engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).]

x. Rural development projects

xi. Slum area development.

xii. Disaster management, including relief, rehabilitation and reconstruction activities.


The CSR projects or programs or activities that benefit only the employees of the company and their families shall not be considered as CSR activities.

Any activity undertaken by the company outside India except for training of Indian sports personnel representing any State or Union territory at national level or India at international level

One-off events such as marathons/ awards/ charitablecontribution/advertisement/spon sorships of TV programs etc

Contribution of any amount directly or indirectly to any political party shall not be considered as a CSR activity.

Expenses incurred by companies for the fulfillment of any Act/ Statute of regulations (such as Lab our Laws, Land Acquisition Act, etc.)

Activities are undertaken by the company in pursuance of its normal course of business

Provided that any 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.


CSR implementation

W.e.f 01.04.2021, Agency who intends to undertake the any CSR Activity, shall register itself with Central Government by filing FORM CSR-1 electronically with ROC



> A company may engage international organizations for designing, monitoring, and evaluation of CSR projects or programs as per its CSR Policy as well as for the capacity building of their own personnel for CSR.

> A company may also collaborate with other companies for undertaking projects or programs or CSR activities in such a manner that the CSR committees of respective companies are in a position to report separately on such projects or programs under these rules.

> The Board of a company shall satisfy itself that the funds so disbursed have been utilized for the purposes and in the manner as approved by it and the Chief Financial Officer or the person responsible for financial management shall certify to the effect

> In case of an ongoing project, the Board of a Company shall monitor the implementation of the project regarding the approved timelines and year-wise allocation and shall be competent to make modifications, if any, for smooth implementation of the project within the overall permissible period.”.


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: –

CSR project list

Provided the Board may alter such plan at any time during the financial year, as per the recommendation of its CSR Committee, based on the reasonable justification to that effect


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

2. Any surplus arising out of the CSR activities shall not form part of the business profit of a company and 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 six months of the expiry of the financial year.

3. Where a company spends an amount above requirement provided under sub-section (5) of section 135, such excess amount may be set off against the requirement to spend under sub­section (5) of section 135 up to immediate succeeding three financial years subject to the conditions that –

a. 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.

b. the Board of the company shall pass a resolution to that effect

4. The CSR amount may be spent by a company for the creation or acquisition of a capital asset, which shall be held by –

a. Implementing agency having charitable objects and CSR Registration Number under sub-rule (2) of rule 4; or

b. beneficiaries of the said CSR project, in the form of self-help groups, collectives, entities; or

c. a public authority

(Provided that any capital asset created by a company before the commencement of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, shall within a period of one hundred and eighty days from such commencement comply with the requirement of this rule, which may be extended by a further period of not more than ninety days with the approval of the Board based on reasonable justification)


CSR Reporting


Mandatory disclosure of CSR projects approved by the Board is to be placed on the website of the company.


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.

Auditors Report as per CARO 2020

The Auditor Report should include:

whether, in respect of other than ongoing projects, the company has transferred unspent amount to a Fund specified in Schedule VII to the Companies Act within a period of six months of the expiry of the financial year in compliance with second proviso to sub-section  (5) of section 135 of the said Act;



Brief detail of CSR Policy

CSR Committee detail

Website link of CSR Committee, Policy etc

CSR Amount


Brief outline of CSR Policy

Composition of CSR Committee

Website link of CSR Committee, Policy etc

Detail of Impact Assessment (if applicable)

Detail of amount available for set off in pursuance of sub-rule (3)(7) of the Companies CSR Policy Rule

Average Net Profit of the Company as per Section 135(5)

CSR Spent on ongoing project and other than on going project

Amount spend in administrative overhead

Detail of unspent CSR Amount for the preceding three financial year

In case of creation or acquisition of capital asset, furnish the details relating to the asset so created or acquired through CSR spent in the financial year (asset wise detail)

Reason, if the Company has failed to spend two present of the average net profit as per section 135(5)

Author Bio

More Under Company Law


  1. Shailender Pandey says:

    It is a very well written article. I recommend readers to follow CS Binita and learn from her rich experience in the area of Corporate Law.

    I look forward to more articles and other content in relation to Corporate Law governance.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

June 2021