CSR Applicability
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CSR Applicability
CSR Applicability in India
Under Section 135 of the Companies Act, 2013, Corporate Social Responsibility (CSR) is mandatory for companies meeting any of the following criteria during the previous financial year:
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Net worth of ₹500 crore or more,
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Turnover of ₹1,000 crore or more,
Such companies must form a CSR Committee and spend at least 2% of their average net profits (of the last three years) on CSR activities specified under Schedule VII of the Act.
CSR activities may include promoting education, healthcare, gender equality, environmental protection, rural development, and more. The company must disclose CSR spending in its annual report.
CSR Expenditure Requirement
Eligible companies must spend at least 2% of the average net profits of the last three financial years on CSR activities as specified in Schedule VII of the Companies Act, 2013.
If the company fails to spend the required amount, the Board must disclose the reasons in its annual report. Additionally, unspent CSR amounts (except ongoing projects) must be transferred to a specified fund within six months of the end of the financial year.
Formation of CSR Committee
Companies meeting the applicability criteria are required to:
Constitute a CSR Committee with at least three directors, including one independent director
Formulate and recommend a CSR Policy
Recommend the amount of expenditure to be incurred on CSR activities
Monitor the implementation of CSR Policy from time to time
Key CSR Activities (Schedule VII Highlights)
CSR activities may include:
Eradicating hunger, poverty, and malnutrition
Promoting education, gender equality, and women empowerment
Environmental sustainability and protection of flora and fauna
Promoting sports, art, and culture
Contributions to PM’s National Relief Fund and other notified funds
Rural development and slum area development projects