The document outlines the corporate social responsibility (CSR) mandates for companies in India as per Section 135 of the Companies Act, 2013, effective from April 1, 2014. Companies meeting certain criteria must create a CSR committee, allocate at least 2% of their average net profits for CSR activities, and report their CSR policies and expenditures. Specific CSR activities encompass various social, educational, and environmental initiatives, including projects for impoverished communities, women empowerment, and cultural preservation.

1. CORPORATE
SOCIAL
RESPONSIBILITY
For Corporate India
w.e.f. 1ST April, 2014

2. MINISTRY OF CORPORATE AFFAIRS, NOTIFIED
Sec. 135 & SCHEDULE VII OF THE COMPANIES
ACT, 2013
• Sec. 135 of the Companies Act, 2013
• Applicability :
Every Company in India,
if one of the following condition is met–
 Net Worth of ₹ 500 Crore or more
 Turnover of ₹ 1,000 Crore or more
 Net Profit of ₹ 5 Crore or more
at any time during the financial year.

3. Sec. 135 OF THE COMPANIES ACT,
2013 shall constitute a
• Companies falling under this section
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE.
• The committee shall consist of 3 or more directors, out of
which at least 1 shall be independent.
• CSR committee would be responsible to formulate CSR
Policy, recommend the CSR activities as specified in Schedule
VII & monitor the CSR expenditure.
• Board would be mandatorily required to disclose its CSR
Policy in its report and on the company’s website.

4. QUANTUM OF PROFIT TO BE SPENT
ON C.S.R. ACTIVITIES
• The CSR contribution would be at least 2% of the average net
profit made during the immediately preceding financial years.
• NET PROFIT
= Net profit as per the financial statements of the company as
per section 198.
BUT
Excludes:
1. Profits generated outside India through overseas
branches & subsidiaries.
2. Any dividend received from other companies in India
that are complying the CSR provision u/s 135

5. COMPANIES (CORPORATE SOCIAL
RESPONSIBILITY POLICY) RULES,
2014
• Once a company is covered under the CSR provisions as per sub
section (1) of Section 135, the company will have to comply
with the rules for 3 consecutive financial year, even if in the
subsequent years these provisions do not apply to them.
• CSR activities must be undertaken in India only.
• Group companies or associates or even two or more
independent companies can collectively set up a registered
trust /society / separate company to undertake the CSR
activities.
However reporting on CSR activities would be done separately.

6. •
COMPANIES (CORPORATE SOCIAL
RESPONSIBILITY POLICY) RULES,
2014
Private & Unlisted companies are exempted from the
requirement of appointing an Independent Director on the CSR
committee.
• The expenditure incurred by the companies on CSR activities
should not be ones incurred in the normal course of business.
Clear distinction must be made between the two.
• The surplus arising of any CSR activities is not to be considered
as business profits of the company.
• The CSR Policies & activities undertaken must be displayed on
the website of the company as well as in the Board Report.

7. COMPANIES (CORPORATE SOCIAL
RESPONSIBILITY POLICY) RULES,
2014
CSR Rules for FOREIGN COMPANIES
• Foreign companies covered under CSR provision, would require
to contribute on the profits from the operations in India.
The Net Worth / Turnover / Net Profit of a Foreign Company
would be computed as per the Financial Statements prepared in
accordance with the provisions of clause (a) of sub section (1) of
Section 381 and section 198 of Companies Act, 2013.

8. COMPANIES (CORPORATE SOCIAL
RESPONSIBILITY POLICY) RULES,
2014
CSR Rules for FOREIGN COMPANIES
• Foreign companies covered under CSR provision, would require
to contribute on the profits from the operations in India.
The Net Worth / Turnover / Net Profit of a Foreign Company
would be computed as per the Financial Statements prepared in
accordance with the provisions of clause (a) of sub section (1) of
Section 381 and section 198 of Companies Act, 2013.

9. COMPANIES (CORPORATE SOCIAL
RESPONSIBILITY POLICY) RULES,
2014
• Any contribution to a political party; directly or indirectly.
• CSR projects for the Welfare of its own employees & its
families.
• Any CSR expenditure incurred outside India.

10. SCHEDULE VII OF THE COMPANIES
ACT, 2013
ACTIVITIES WHICH MAY BE INCLUDED
• BY through a notification on 27th Feb., 2014 amended the schedule and
MCA COMPANIES IN THEIR CSR POLICY
widened the scope of CSR activities.
• Now the revised Sch. VII is as follows :1. Eradicating hunger, poverty, and malnutrition, promoting preventive
health care, sanitation and making available safe drinking water.
2. Promoting education, including special education and employment
enhancing vocation skills among children, women, elderly, and
differently abled and livelihood enhancement projects.
3. Promoting gender equality, empowering women, setting up homes and
hostels for women, and orphans, setting up old age homes, day care
centres, and such other facilities for senior citizens and measures for
reducing inequalities faced socially, and economically backward groups.

11. SCHEDULE VII OF THE COMPANIES
ACT, 2013
ACTIVITIES WHICH MAY BE INCLUDED
BY COMPANIES sustainability, ecological balance, protection of
4. Ensuring environmental IN THEIR CSR POLICY
flora and fauna, animal welfare, agroforestry, conservation of natural
resources and maintaining quality of soil, air and water.
5.
6.
7.
Protection of national heritage, art, and culture including restoration of
buildings and sites of historical importance and works of art, setting up
public libraries, promotion and development of traditional arts and
handicrafts.
Measures for the benefit of armed forces veterans, war widows, and
their dependents.
Training to promote rural sports, nationally recognized sports,
paralympic sports and olympic sport.

12. SCHEDULE VII OF THE COMPANIES
ACT, 2013
ACTIVITIES WHICH MAY BE INCLUDED
BY COMPANIES IN THEIR CSRor POLICY
8. Contribution to Prime Minister’s National Relief Fund
any other fund
set up by the Central Government for socio-economic development and
relief and welfare of the scheduled castes and the Scheduled tribes and
other backward classes, minorities, and women.
9.
Contribution or funds provided to technology incubators located within
academic institutions which are approved by the Central Government.
10. Rural Development Projects.

13. FORMAT OF THE ANNUAL
REPORT ON CSR
ACTIVITIES TO BE
INCLUDED IN THE BOARD
REPORT.
1.
2.
3.
4.
5.
A brief outline of the Company’s CSR policy.
Composition of CSR committee.
Average net profit of the last three financial years.
Prescribed CSR expenditure (2% of the net profit).
Details of CSR spent during the financial year:
a) Total amount to be spent for the financial year
b) Amount unspent; if any
c) Manner in which the amount spent during the financial
year.

14. STATEMENT SHOWING THE C.S.R.
EXPENDITURE

15. FORMAT OF THE ANNUAL
REPORT ON CSR
ACTIVITIES TO BE
INCLUDED IN THE BOARD
6. In case REPORT. has failed to spend the two percent of the
the company
average net profit of the last three financial years or any part
thereof, the company shall provide the reasons for not
spending the amount in its Board report.
7. A responsibility statement of the CSR Committee that the
implementation and monitoring of CSR Policy, is in compliance
with the CSR objectives and Policy of the company.
8. The report shall be signed by
 CEO / MD / Director of the company
 Chairman of CSR committee
 Person specified under clause (d) of sub section (1) of
Section 380 of the Act. (in case of foreign company)

16. LINK TO NOTIFICATION
• Notification for the applicability of Sec. 135 & Sch. VII of
the Companies Act, 2013
http://www.mca.gov.in/Ministry/pdf/CompaniesActNotificati
on1_2014.pdf
__________________________________________________
• Notification: Companies (Corporate Social Responsibility
Policy ) Rules, 2014
http://www.mca.gov.in/Ministry/pdf/CompaniesActNotificati
on2_2014.pdf
__________________________________________________
• Notification amending Sch. VII of the Companies Act, 2013.
http://www.mca.gov.in/Ministry/pdf/CompaniesActNotificati
on3_2014.pdf

17. TAX TREATMENT OF
CSR EXPENDITURE
Presently there is no circular or notification issued
by CBDT regarding the tax treatment for CSR
expenditure.

18. ANANND KANKNI
COMPANY SECRETARY
+91-9707056733