Corporate Social Responsibility (CSR)

What Is CSR?

CSR is a company's way of giving back to society. It includes environmental care, ethical practices, community support, and responsible investments.

CSR Applicability (Section 135)

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

Types of CSR Activities

CSR Committee Structure

• 3+ Directors (1 Independent mandatory, unless exempted)
• Pvt. Ltd. (2 Directors): Both form the committee
• Foreign Co.: 1 Indian resident + 1 foreign nominee

CSR Committee Functions

• Formulate and recommend CSR policy
• Recommend budget & monitor execution
• Prepare annual action plan (Rule 5(2))

Role of the Board

• Approve, implement & disclose CSR policy
• Ensure 2% average net profit spending
• Report unspent amount with valid reasons
• Cap administrative overheads at 5%

Form CSR-1

• Mandatory MCA registration for NGOs/Trusts/Societies
• Digital verification by CA/CS/CMA
• Auto-allotment of CSR Registration Number

Documents Required for CSR-1

• Registration Certificate (Trust/Society/Section 8)
• PAN card of entity & signatory
• 12A, 80G (if applicable)
• DSC of authorized signatory

Form CSR-2

• Filed with AOC-4 annually
• CSR spend data (3 years)
• Capital asset details, CSR Committee info

Penalties for Non-Compliance

• Company: Up to ₹1 crore
• Officer in default: Up to ₹2 lakh
• Excess spend: Can be carried forward for 3 years
• Surplus: Not treated as business profit

Important Compliance Notes

• CSR capital assets must benefit society (NGO/public/beneficiaries)
• Unspent funds to be used within 3 years or transferred to Fund (Schedule VII)
• CSR Committee not required if expenditure ≤ ₹50 lakh