Relevant Section: 135 of Companies Act, 2013
Applicability of CSR Provisions under Companies Act, 2013
(a) Every company having a Net worth-Rs. 500 crore or more or;
(b) Every company having a Turnover- Rs. 1,000 crore or more or
(c) Every company having a Net Profit- Rs. 5 crore or more in immediately preceding Financial Year
Compliance related to Section 135 of Companies Act, 2013
(a) Every company falling in above criteria shall constitute a Corporate Social Responsibility Committee of the Board consisting of- 3 or more Directors, out of which at least 1 director shall be an independent director. If there is no independent director, then Committee can have 2 or more Directors.
(b) Companies that fall into the above criteria shall ensure to spend, in every financial year, at least
- 2% of the average net profits of the company
- made during the 3 immediately preceding financial years
[or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years], in pursuance of its Corporate Social Responsibility Policy.
List of Permitted & Non-Permitted CSR Activities under Section 135 read with Schedule-VII of Companies Act, 2013
| Schedule-VII | Permitted CSR Activities
(Schedule-VII of Companies Act, 2013) |
Rule-2 (d) | Non- Permitted CSR Activities (Rule 2(d) of Companies (Corporate Social Responsibility Policy) Rules, 2014) |
| (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. | (i) | Activities are undertaken in pursuance of the normal course of business of the company.
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; |
| (ii) | Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects. | (ii) | 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; |
| (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. | (iii) | contribution of any amount directly or indirectly to any political party under section 182 of the Act; |
| (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 set-up by the Central Government for rejuvenation of river Ganga. | (iv) | activities benefitting employees of the company as defined in clause (k) of section 2 of the Code on Wages, 2019 (29 of 2019); |
| (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; | (v) | activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services; |
| (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; | (vi) | activities carried out for fulfilment of any other statutory obligations under any law in force in India; |
| (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 | ||
| (ix) (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 Organisation (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. `slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.] |
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| (xii) | Disaster management, including relief, rehabilitation and reconstruction activities.] |
Author Bio
Dear Ms Surbhi,
Thanks for this insightful article.
Can CSR contributions get a benefit of 8G exemptions if applicable ?
Capt Sood