Who is required to spend on CSR
Section 135 applies if a company in any financial year has:
- Net worth of ₹500 crore or more, OR
- Turnover of ₹1,000 crore or more, OR
- Net profit of ₹5 crore or more.
If applicable, the company must spend at least 2% of average net profits of the immediately preceding three financial years on CSR activities.
Schedule VII activities & exclusions
Activities listed in Schedule VII of the Companies Act, including: poverty alleviation, education, gender equality, environmental sustainability, healthcare, sanitation, rural development, and contributions to certain government funds (PM CARES, PMNRF, Swachh Bharat Kosh, etc.).
Activities undertaken in the normal course of business of the company are not CSR. Sponsorships of events, employee training, and political contributions are excluded.
Section 135, CSR Rules & the two forms
The relevant references:
- Section 135 of the Companies Act 2013.
- Companies (CSR Policy) Rules 2014 — substantially amended in 2021.
- Schedule VII — permitted CSR activities.
- Form CSR-1 — registration of implementing agency (NGO, Section 8 company, registered trust).
- Form CSR-2 — annual reporting of CSR spend, attached to MGT-7.
How we run a CSR programme end-to-end
- Applicability assessment — recompute thresholds annually post-audit.
- CSR policy drafting — aligned with the company’s mission, Schedule VII activities, monitoring framework.
- CSR Committee constitution — minimum 3 directors including 1 independent (or 2 directors if 1 ID is not required).
- Implementing agency selection — we due-diligence the NGO, Section 8 company or trust; verify CSR-1 registration.
- Project planning & budgeting — multi-year project commitments, milestones, impact assessment.
- Annual reporting — CSR-2 filing with MCA, CSR section of Board’s Report, impact assessment report (for projects above ₹1 crore where ongoing for 1+ year).
- Unspent amount — transfer to Unspent CSR Account or Schedule VII fund as per the rules.
What you’ll need to share
- Last 3 years’ net profit computation as per Section 198.
- Existing CSR policy (if any).
- Board composition and CSR Committee minutes.
- Implementing agency’s CSR-1 registration, audited financials, project plan.
- Bank statements / payment proofs of CSR contributions.
- Project documentation — MoU, milestones, deliverables.
- Impact assessment reports (where applicable).
The annual CSR calendar
Annual CSR cycle is calendar-driven:
- April / May: applicability assessment based on prior-year financials.
- May / June: CSR Committee approves annual action plan.
- July / March: project execution.
- April: unspent amount transfer.
- May / July: Board’s Report CSR section + CSR-2 filing.
Annual retainer covers all of the above. Project-specific impact assessment and on-site verification are quoted separately.
Common questions on CSR
What if our CSR spend falls short of 2%?
The shortfall must be transferred to Schedule VII funds within 6 months of the financial year end — unless it relates to an ongoing project, in which case it goes to the Unspent CSR Account and is utilised over 3 years.
Can we do CSR through our promoter family’s NGO?
Yes if the NGO is CSR-1 registered and undertakes Schedule VII activities. Independent monitoring and impact assessment apply.
Does sponsorship of an industry conference count?
Generally no. Sponsorships and brand-building activities are excluded from CSR. We map proposed spends carefully.
Is impact assessment mandatory for all CSR projects?
Mandatory only for projects with outlay above ₹1 crore that have been completed or have continued for at least 1 year, in companies with average CSR obligation above ₹10 crore in the last 3 years.
Talk to a partner.
A 30-minute call with a partner — no deck, no follow-up email blasts. Just a read on whether we’re the right team to handle your CSR programme.