| Sl No. |
Subject |
Key Changes |
| 1. |
Quantum of spending
(Sec 135-5) |
Now every company which has not completed the period of 03 Financial years will have to spend 2% during such preceding Financial Years. |
| 2 |
CSR Spending(Section 135-7) |
CSR spending made Mandatory from Voluntary. Hence now it is Spend or penalized. Earlier it was spend or explain. |
| 3. |
Treatment of unspent amount(Section 135-6) |
- Not relating to ongoing Project: In case of failure to spend the same, will require carry forward of the same to a Fund specified in Schedule VII, within 6 months of close of financial year, in addition to disclosure of reasons for not spending in Board Report. So amount remaining unspent (other than ongoing project) for the financial year 2020-‐21 shall be transferred to Schedule VII fund latest by September 30, 2021.
- Relating to Ongoing Project To be transferred within a period of 30 days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account (UCSRA). So amount remaining unspent (ongoing project) for the financial year 2020--‐21 shall be transferred to UCSRA latest by April 30, 2021.
- Extended time for spending unspent amount relating to ongoing Project -‐ Such amount shall 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 specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year. So amount remaining unspent transferred for FY 2020-‐21 to UCSRA, has to be utilized for the project up to FY 2023-‐24, otherwise shall be transferred to a fund specified in Schedule VII. Hence every project period should not exceed 03 years.
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| 4. |
Consequence of non-transfer in aforesaid manner(Sec 135-5) |
- Offence decriminalised vide CAA, 2020
- Company liable to pay penalty twice the amount of default or Rs. 1 cr, whichever is less
- Every officer liable to pay penalty @ 10% of default or Rs. 2 lacs, whichever is less
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| 5. |
Setoff of excess amount spend towards CSR in immediate succeeding three financial years subject succeeding years(Sec 135-5) |
Excess amount may be set off against the requirement to spend under section 135(5) up to immediate succeeding 03 financial years subject to the conditions that –
- 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.
- the Board of the company shall pass a resolution to that effect.
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| 6. |
Administrative
Definition added.
Overheads(CSR Rule) |
- Definition added.
- Only the expenses incurred by the company for general management and administration’ of Corporate Social Responsibility functions classified as Administrative overheads.
- The expenses directly incurred for the designing, implementation, monitoring, and evaluation of a particular Corporate Social Responsibility project or programme specifically excluded.
- The administrative overheads not to exceed five percent of total CSR expenditure of the company for the financial year.
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| 7. |
CSR definition(CSR Rule) |
- Inclusive definition now made exclusive and activities not considered as CSR specified clearly. Accordingly the following activities shall not be considered CSR:
- Activities undertaken in pursuance of normal course of business of the company (except COVID 19 related R & D up to the financial year 2022-‐23, subject to certain conditions);
- 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);
- Contribution of any amount directly or indirectly to any political party under section 182 of the Act.
- activities that significantly benefit the employees of the company as defined in clause (k) of section 2 of the Code on Wages, 2019 (29 of 2019);
- activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services;
- activities carried out for fulfillment of any other statutory obligations under any law in force in India;
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| 8. |
CSR Policy(CSR Rule) |
CSR Policy to include:
- approach and direction given by the board of a company, taking into account the recommendations of its CSR Committee;
- guiding principles for selection, implementation and monitoring of activities;
- Formulation of the annual action plan.
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| 9. |
CSR Committee(Sec 135-9) |
- CSR Committee not required, if amount to be spent by a company does not exceed fifty lakh rupees.
- In such cases Board shall discharge all functions of CSR Committee.
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| 10. |
Ongoing Project(CSR Rule) |
- “Ongoing Project” means a multi-‐year project having timelines not exceeding 03 years excluding the financial year in which it was commenced.
- Project that was initially not approved as a multi-‐ year project can be made ongoing by extending the duration beyond one year by the board based on reasonable justification.
- It looks that CSR Project duration cannot be more than 03 years.
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| 11. |
Implementing Agency(CSR Rule) |
- Companies can do CSR either on its own or through Implementing Agency.
- Three major changes had been made:
- w.e.f. 01.04.2021 registration of such entity shall be mandatory by filing form CSR 1. Unique CSR Registration Number shall be generated for each entity.
- Only registered public trust now allowed as against any registered trust, except in case established by CG/SG.
- In addition to registration under respective act, registration under the provisions of section 12A & 80 G of the Income Tax has been made mandatory.
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| 12. |
Engagement of International Organisations(CSR Rule) |
- A company may engage international organisations for designing, monitoring and evaluation of the CSR projects or programmes as per its CSR policy as well as for capacity building of their own personnel for CSR.
- Only Central Government notified organisations shall qualify as International Organisation
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| 13. |
Responsibility of a Board and CFO(CSR Rule) |
- The Board shall be responsible to:
- satisfy itself that the funds so disbursed have been utilised for the purposes and in the manner as approved by it.
- monitor the implementation of the project with reference to the approved timelines and year-‐wise allocation
- to make modifications, if any, for smooth implementation of the project within the overall permissible time period.
- CFO or the person responsible for financial management shall certify to the effect.
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| 14. |
Annual Action Plan(CSR Rule) |
- The CSR Committee shall formulate and recommend to the Board, an annual action plan in pursuance of its CSR policy.
- Annual Action Plan to include:
- List of CSR Projects approved
- Manner of execution
- modalities of utilisation of funds and implementation schedules
- monitoring and reporting mechanism
- On recommendation of CSR Committee Annual Action Plan may be altered by the Board.
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| 15. |
Treatment of surplus arising out of CSR activities(CSR Rule) |
- Any surplus arising out of the CSR activities shall not form part of the business profit of a company.
- Such surplus shall be ploughed back into the same project or shall be transferred to the Unspent CSR Account and spent in pursuance of CSR policy / 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
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| 16. |
Capital Assets(CSR Rule) |
- The CSR Assets to be held by a Section 8 Company, or Registered Public Trust, or registered society with charitable objects, having CSR registration number or beneficiaries of the said CSR project, in the form of self-‐help groups, collectives, entities or a public authority.
- Any CSR asset created prior to these Rules, required to comply within a period of 180 days (Board may extend by 90 days).
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| 17. |
CSR Reporting(CSR Rule) |
- From financial year starting on or after April 01, 2020 CSR report shall be in Annexure – II, previous years Annexure I shall continue.
- Annexure II mandates additional disclosures regarding:
- Impact assessment
- Amount available for Setoff
- CSR amount spent against ongoing project/other than ongoing project
- Administrative overhead
- Unspent amount against ongoing project/other than ongoing project
- Details regarding capital assets
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| 18. |
Impact Assessment(CSR Rule) |
- A company having the obligation of spending average CSR amount of Rs 10 Crore or more in the three immediately preceding financial years in pursuance of Section 135(5) of the Act, shall undertake impact assessment.
- Impact assessment to be done by an independent agency.
- Impact assessment to be done in respect of CSR projects having outlays of one crore rupees or more, and which have been completed not less than one year before undertaking the impact study.
- The impact assessment reports shall be placed before the Board and shall be annexed to the annual report on CSR.
- Impact assessment expenditure for a financial year shall not exceed five percent of the total CSR expenditure for that financial year or fifty lakh
- rupees, whichever is less.
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| 19. |
Website Disclosure(CSR Rule) |
New Disclosure on Website, ifany – CSR Committee constitution, CSR Projects approved. |
| 20. |
National Unspent CSR Fund |
- Central Government shall establish a ‘National Unspent CSR Fund’ for purpose of transferring the unspent amount of companies, which shall be then used for activities outlined in Schedule VII.
- Until such fund is created the unspent CSR amount in terms of provisions of sub-‐section (5) and (6) of section 135 of the Act shall be transferred by the company to any fund as specified in schedule VII of the Act.
- PMNRF, PM CARES, Swach Bharat Kosh, Clean Ganga Fund are the funds specified under Schedule VII.
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| 21. |
Form CSR 1 |
- For registration of Implementing agencies with MCA
- Unique CSR Registration Number shall be generated for each entity. It is one time registration.
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