🧾 Corporate Social Responsibility (CSR) – Overview

CSR is a statutory obligation under the Companies Act, 2013, requiring eligible companies to invest in social welfare and development projects. It creates a framework for companies to contribute to societal needs while maintaining business sustainability.

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📌 Applicability of CSR (Section 135 of Companies Act, 2013)

CSR provisions apply to companies (including foreign companies with branches in India) meeting any of the following criteria during the immediately preceding financial year:

• Net worth ≥ ₹500 crore
• Turnover ≥ ₹1,000 crore
• Net profit ≥ ₹5 crore

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📋 CSR Expenditure Requirement

Companies falling under CSR must:

• Spend at least 2% of their average net profits (last 3 years) on CSR.
• If the company fails to spend the amount:
  • Reasons must be disclosed in the Board’s Report.
  • Unspent amount (except ongoing projects) must be transferred to a Fund specified in Schedule VII within 6 months of financial year-end.
  • For ongoing projects, the amount must be transferred to a CSR Unspent Account within 30 days and spent within 3 financial years.

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🏢 CSR Committee – Composition

Company Type	Committee Composition
General Company	≥ 3 directors (at least 1 independent)
Private Company	≥ 2 directors
Foreign Company	≥ 2 persons (1 resident in India, 1 nominated by foreign entity)

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🛠 CSR Committee Responsibilities

1. Formulate and recommend a CSR Policy.
2. Recommend the CSR budget.
3. Monitor implementation and impact.
4. Propose an Annual Action Plan, covering:
   • Approved CSR projects
   • Execution strategies
   • Budget allocation and timelines
   • Monitoring mechanisms
   • Impact assessment details

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🧾 Role of Board of Directors in CSR

• Approve and disclose CSR Policy in Board’s Report.
• Ensure statutory CSR spending.
• Monitor project progress and implementation.
• Disclose names of CSR Committee members in annual reports.

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🌍 Permitted CSR Activities (Schedule VII)

CSR spending should be on activities within India and may include:

1. Hunger, poverty & malnutrition eradication, healthcare, sanitation (e.g., Swachh Bharat Kosh)
2. Education support & vocational skills development (especially for disadvantaged groups)
3. Gender equality & women empowerment
4. Environmental sustainability (e.g., Clean Ganga Fund)
5. Preservation of cultural heritage
6. Support to armed forces veterans and war widows
7. Promotion of sports (including Olympics & Paralympics)
8. Contribution to PM CARES Fund or other central government funds for welfare
9. Support for R&D in science, tech, engineering, and medicine
10. Donations to IITs, ICMR, ICAR, DRDO, DBT, etc.
11. Rural development projects
12. Slum area development
13. Disaster management

❌ Exclusions: CSR activities should not be:

• Carried out in the normal course of business (with some exceptions like COVID-19-related activities)
• For political contributions
• Benefiting only company employees

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📈 Benefits of CSR Implementation

• Improves brand recognition & loyalty
• Boosts financial performance
• Enhances capital access
• Helps in employee engagement
• Lowers operating risks
• Encourages community development

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📝 Reporting & Disclosure Requirements

• Include CSR policy, activities, and expenditure in the Board’s Report.
• Upload CSR policy and projects on the company’s website.
• File Form CSR-2 annually with the Registrar of Companies (ROC).

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🔁 Amendments & Flexibility

• The Board may revise the Annual Action Plan during the financial year upon recommendation from the CSR Committee.
• Provisions now require greater transparency, impact assessment, and structured reporting.

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🏁 Final Takeaway

CSR in India is not just a compliance requirement—it’s a powerful tool for companies to:

• Build goodwill and brand value
• Improve stakeholder relations
• Contribute meaningfully to national development goals

Companies should treat CSR as a strategic investment, not an obligation.

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