Section 135 of the Companies Act, 2013 and The Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time provides for the provisions of Corporate Social Responsibility applicable on corporate entities in India.


Every Company which fulfils any of the following limits during the immediately preceding Financial Year:

1. Net worth: 500 Cr or more, or

2. Turnover: 1000 Cr or more, or

3. Net Profit: 5 Cr or more

Shall form a Corporate Social Responsibility Committee consisting of:

1. 3 or more Directors with atleast one being an Independent Director. However, Companies which are not required to have an Independent Director on the Board, they can form the committee without such director

2. In case of Private Limited Companies: 2 or more Directors

3. In case of Foreign Company: Atleast two directors, of which, one being an Indian Resident and one nominated by foreign Company

CSR Corporate Social Responsibility_grün3

Recommendary role of CSR Committee:

1. Formulate and recommend to the Board, a CSR Policy indicative of activities to be undertaken as per Schedule VII of the Company’s Act, 2013

2. Recommend expenditure amount for (i)

3. Monitor CSR Policy from time to time

Board of Director’s Role:

1. Approve Policy formulated by CSR Committee

2. Disclosure of CSR Policy content in Board’s Report

3. To place CSR Policy on Company’s website, if any

4. Make spending on activities mentioned in CSR Policy

Disclosure Requirements:

Board Report as per Section 134: Composition of CSR Committee and disclosure of CSR Policy and amount spent. In case, the Company has not made requisite CSR expenditure in any year, the Board shall provide the reason in Board Report.

Manner and Extent of Expenditure

Extent of Expenditure

The Company shall spend in every financial year, at least two percent of average net profits (calculated as per Section 198 of the Companies Act, 2013) of immediately preceding 3 Financial years, where company has completed three years or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years

Eligible Expenditure

1. To be spent in local area of operation of the Company

2. Expenditure should be made in India only

3. Expenditure should be made only on activities approved in CSR Policy excluding activities undertaken in normal course of business

4. The CSR expenditure benefiting only the employees and their family members shall not be considered expenditure on CSR as per Section 135

5. The Board of a company may decide to undertake its CSR activities approved by the CSR Committee, through

(a) a company established under section 8 of the Act or a registered trust or a registered society, established by the company, either singly or alongwith any other company, or

(b) a 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 any entity established under an Act of Parliament or a State legislature

(c) a company established under section 8 of the Act or a registered trust or a registered society, other than those specified in (a) & (b), such company or trust or society shall have an established track record of three years in undertaking similar programs or projects; and the company has specified the projects or programs to be undertaken, the modalities of utilisation of funds of such projects and programs and the monitoring and reporting mechanism.

Discontinuance of CSR Provisions:

A Company on which CSR had been applicable in any year, shall not be required to follow the provisions of Section 135 and the said rules if the Company ceases to fall under applicability provisions for a period of 3 consecutive financial years. However, if the Company, if at any time after such cessation, again achieves the threshold limits, it shall comply with the provisions of Section 135 and corresponding rules.

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May 2021