In order to have better Corporate Governance and Compliance, one-time registration in a simple E-Form CSR-1 is mandatory applicable to all the Registered Societies, Registered Trusts and Registered Section 8 Companies and other entities who is engaged in CSR (Corporate Social Responsibility) activities/ funding. Through this article, the author purports to analyze the provisions and its practical implications, which have been discussed herewith:-
What is E- Form CSR-1
As per Notification issued by Ministry of Corporate Affairs dated 22nd January 2021, from April 1, 2021 CSR Funding will be released only to those Implementing Agencies/ Entity/ NGOs that are registered with MCA by filing Form CSR-1. Therefore, E- Form CSR-1 is a registration form for getting CSR funding by Entity from the corporates. The Form CSR-1 is termed as Form for “Registration of Entities for undertaking CSR Activities”
On successful submission of the Form CSR-1 on the portal, a unique CSR Registration Number shall be generated by the system automatically.
Entities covered for registration in Form CSR -1
1. Company established under Section 8 of the Companies Act, 2013 or Registered Trust or Registered Society with Section 12A and Section 80G registrations under the Income Tax Act, 1961 established by the company, either singly or along with any other company or
2. Company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or
3. Entity established under an Act of Parliament or State Legislature.
4. Company established under Section 8 of the Companies Act, 2013 or Registered Public Trust or Registered Society with Section 12A and Section 80G registrations under the Income Tax Act, 1961 and having an established track record of at least 3 years in undertaking similar activities.
Note: ‘Registered Trust’ or ‘Registered Public Trust’ (as referred in Rule 4(1) of the Companies CSR Rules, 2014) would include Trusts registered under Income Tax Act 1961, for those States where registration of Trust is not mandatory.
Following documents may be seen to verify the track record of 3 years of such entities:-
a) Audited financials of entity for last 3 financial years;
b) Date of registration u/s 12A and u/s 80G;
c) Form 10B of the entity for last 3 financial years;
d) Note of nature of activities carried out by the entity in the earlier years;
e) Return of income and computation of income for the past 3 years;
f) Details of CSR projects already undertaken by the entity;
g) Assessment orders, if any, to verify the activities accepted by the department.
If the Entity/NGOs are established by any company or group of companies:-
In case the Entity/NGOs are established by a company or group of companies, details of such companies i.e. name of such group companies should be mention in Form CSR-1. Maximum upto 5 group companies can be provided in form.
Impact on Ongoing Projects carried out by an entity which is not registered under section 12A and 80G of the Income Tax Act, 1961.
The requirement of registration for an entity under section 12A and 80G of the Income Tax Act, 1961 is effective from 22nd January, 2021. Therefore, ongoing CSR projects which are being carried out by the entity shall not require filling of Form CSR-1.
However it is advisable to obtain the requisite registration at the earliest and in the meanwhile they may continue to carry on with the projects assigned. In case of new assignment, the entity should have prior registration.
Example: Company A carries out its CSR project “X” through an entity during the FY 2020-21. Further company A intends to start a new CSR project “Y” in the FY 2021-22. The Entity will have to register itself for project “Y” by filing form CSR- 1. As project “X” is an ongoing project, the entity is not required to file form CSR -1.
Documents required for filing Form CSR-1:
Note:- Maximum 10 name of Directors/ Board of Trustees/ Chairman/ CEO/ Secretary/ Authorized Representatives of the entity including their Name, DIN/PAN and Email ids can be provided in form CSR-1.
Form CSR-1 need to be digitally signed by following persons:
Let’s take up some general points which may be kept in mind by Entity/ NGOs while filling E- Form CSR-1:
1. Suppose an Entity/ NGOs named “XYZ” has applied for registration under section 12A and 80G as on 31.12.2020 and till date it has not received registration under this section. Then here question arises as to whether “XYZ” can file form CSR-1 on the basis of acknowledgement number received at the time of registration? So, it is clarified that “XYZ” must have register under section 12A and 80G at the time of filing form CSR-1.
Hence, it is concluded that Entity/ NGOs are not able to file Form CSR-1 on the basis of Acknowledgement No.
2. Suppose an Entity/ NGOs named “XYZ” is working as Public Trust/ Society/ Section 8 company but not registered under section 12A and 80G till date. Then here question arises as to whether “XYZ” can file form CSR-1 on the basis of only NGOs status? So, it is clarified that “XYZ” is not allow to file Form CSR-1 on the basis of NGO status only.
Hence, it is concluded that Entity/ NGOs are registered under Section 12A and 80G at the time of filling form CSR-1.
3. Suppose an Entity/ NGOs named “XYZ” is registered under section 12A and 80G as on 31.03.2021 but not filed re-registration request under section 12A and 80G till date. Then the question arises as to whether “XYZ” can file form CSR-1 on the basis of its existing registration? So, it is clarified that “XYZ” can file the form CSR-1 on the basis of its existing registration.
Hence, it is concluded that all the existing registration under section 12A and 80G is valid till 30.06.2021 and on the basis of which they can file Form CSR-1.
4. Suppose an Entity/ NGOs named “XYZ” is registered under section 12A as on 31.03.2021 but not registered under 80G till date. Then the question arises as to whether “XYZ” can file form CSR-1 on the basis of registration under section 12A? So, it is clarified that “XYZ” cannot file the form CSR-1 on the basis of 12A registration only.
Hence, it is concluded that registration under both the section 12A as well as 80G of the Income Tax Act 1961 is mandatory to file Form CSR-1.
5. Suppose an Entity/ NGOs named “XYZ” fulfils all the conditions and filed Form CSR-1. Then the question arise is from which date “XYZ” will start receiving funding from CSR Donating companies? So, it is clarified that filing CSR-1 is primary compliance that must be done by all the eligible NGOs.
Hence, it is concluded that for receiving grants from CSR Donating companies, they have to contact donating companies or may directly approach by donating companies.
The purpose of Government behind the registration under E-Form CSR-1 seems to monitor, control and see how companies manage their business processes and their CSR activates in a better and transparent manner. Similar amendment has been moved in Income Tax Law requiring re-registration of all the existing charitable trusts with effect from 1st April 2021 till 30th June 2021.
Disclaimer: Nothing contained in this document is to be construed as a legal opinion and based on the understanding and interpretation of author which is to be used for educative purposes only.
[The author is a Company Secretary and can also be reached at [email protected]]