Categories: MCA/ROC Compliances

CSR Expenditure by Corporates

CSR EXPENDITURE BY CORPORATES

Companies that are subject to CSR provisions are required to spend at least two percent (2%) of their average net profits made during the three (3) immediately preceding financial years on CSR activities as specified in Schedule VII of the Act and in accordance with the Company’s CSR Policy, according to Section 135(5) of the Companies Act, 2013. The following are the checkpoints for the CSR activities to be carried out in FY 2021-22.

CSR COMMITTEE CHECKPOINTS

  • Monitoring/reviewing the company’s CSR policy and making recommendations for changes, if necessary;
  • Budget and quantity of spending to be incurred on CSR activities should be re-evaluated.
  • Recommend to the Board CSR activities, projects, and programmes to be carried out by the Company or by any designated implementing agencies with a unique CSR Registration Number;
  • Formulation and recommendation to the Board of Directors of an annual action plan in accordance with the company’s CSR policy, or modification of the existing annual action plan, if any;
  • The following items will be included in the annual action plan:
    • Modalities of utilization of funds and implementation schedules
    • List of CSR Projects approved
    • Manner of execution
    • Monitoring and reporting mechanism
    • Details and need of impact assessment, if any.

CHECKPOINTS APPLICABLE FOR BOARD OF DIRECTOR ON CSR

  • Approve any changes to the CSR Policy that the CSR Committee recommends;
  • The Approve the budget and amount of money to be spent on CSR initiatives.
  • Approve the annual action plan in accordance with the company’s CSR policy.
  • When necessary, the Board shall consider the recommendations of the CSR Committee and offer appropriate instructions / directions to the Corporate Social Responsibility Committee.
  • Ensure that the company’s Corporate Social Responsibility operations are carried out in compliance with Schedule VII of the Companies Act, 2013 and the company’s Corporate Social Responsibility policy;
  • In the case of an ongoing project, the Board of Directors of a Company shall monitor the project’s implementation in accordance with the approved timelines and year-by-year allocation, and shall be competent to make any necessary changes to ensure that the project is completed within the overall permitted time period.
  • The company’s Board of Directors must be satisfied that the money disbursed were used for the purposes and in the manner agreed by it, and the person in charge of financial management must attest this.‘*’ The functions of the Corporate Social Responsibility Committee may, however, be discharged by the company’s Board of Directors if the company’s CSR expenditure is less than fifty (50) lakh rupees.
  • Companies must also make the makeup of the CSR Committee, Corporate Social Responsibility Policy, and Projects approved by the Board publically available on their website, if they have one.
  • Kindly be informed that CSR spending is now required, and any failure to comply with the foregoing provisions will result in harsh penalties. As a result, companies subject to CSR laws must meet their obligation to spend on CSR activities/projects or transfer the required amount to the funds provided in Schedule VII by March 31, 2022 in order to comply with these provisions.

ANNUAL ACTION PLAN DETAILS:-

Financial Year: 2021-22
Company Name:
No. of projects proposed:
Average net profit of the company for last three financial years:
Prescribed CSR Expenditure (two per cent of the average net profit of the company for last three financial years):
Total CSR Projects Outlay Budget:
  • LIST OF CSR PROJECTS OR PROGRAMS TO BE UNDERTAKEN IN AREAS OR SUBJECTS SPECIFIED IN SCHEDULE VII OF THE ACT:

S.No.

Focus Area From Sch VII

Details of  Location / Project

Manner of Execution

Funds Allocated (INR)

Total Funds Allocated For FY 2021-22

SCHEDULE OF IMPLEMENTATION INCLUDING DETAILS ON UTILIZATION OF FUNDS

  • Depending on the nature of the project, funds will be disbursed in phases or tranches.
  • The Corporate Social Responsibility budget will be used for CSR initiatives that the Board will authorise based on the CSR Committee’s recommendations.
  • A reimbursement model will be used for specific projects. After a financial review of the expenses incurred, the cash will be disbursed. With the approval of the Corporate Social Responsibility Committee and the Board, the money will be disbursed directly to partner organizations/beneficiaries for the remaining projects.

  REPORTING & MONITORING MECHANISM:

  • The monitoring mechanism for each project will vary depending on the project’s nature.
  • On the basis of periodic reports/Annual Reports and utilisation certificates received from Implementing Agency/ies on the Project/Programs completed during the year, monitoring and reporting will be carried out.

 DETAILS OF IMPACT ASSESSMENT & THEIR NEED, IF APPLICABLE

  • Companies with a Corporate Social Responsibility budget of INR 10 crore or more in any fiscal year, as well as any projects with outlays of INR 1 crore or more, are required to do impact assessments. Impact evaluations will be carried out in accordance with their application.
  • CSR EXPENDITURE BY CORPORATES

Revised Applicability Thresholds

The Companies (Amendment) Bill, 2025 (Bill No. XXXII of 2025), introduced significant changes to Section 135 of the Companies Act, 2013, effective after parliamentary approval. A company must now comply with CSR provisions if it meets any one of the following in the immediately preceding financial year:

  • Net worth ≥ INR 100 crore (reduced from INR  500 crore)
  • Turnover ≥ INR 500 crore (reduced from INR 1,000 crore)
  • Net profit ≥ INR 3 crore (reduced from INR 5 crore)

Expansion of CSR Obligations :

Mid‑sized companies now fall within the CSR scope, broadening the number of eligible companies. CSR obligations will trigger based on fresh annual criteria, similar to current rules but with lower thresholds—meaning re‐evaluation each year

Strengthened Governance

A mandatory CSR Committee must be constituted, including Three or more directors, and At least one director with extensive CSR experience, a new requirement

Implementation Timeline

The amendments become enforceable after parliamentary approval and gazette notification, pending final enactment.

Practical Impact for Companies

Companies previously outside CSR ambit due to smaller size are now required to

    • Constitute a CSR Committee (with expertise),
    • Draft and approve a CSR policy,
    • Allocate 2% of average net profits over the last three years for CSR,
    • Develop mechanisms for monitoring, reporting, and transparency
Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.

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