The document discusses recent changes and amendments to corporate social responsibility (CSR) regulations in India, emphasizing mandatory compliance for companies meeting specific financial criteria. It outlines the shift from a 'comply or explain' approach to a 'comply or pay fine' framework, introduces stringent penalties for non-compliance, and details the responsibilities of CSR committees. Additionally, it covers the implementation modes, reporting requirements, and the activities deemed eligible for CSR funding under Schedule VII of the Companies Act.

1. CORPORATE
SOCIAL
RESPONSIBILITY
Recent changes and Provisional Amendments in
different stages

2. CSR:
In General terms CSR
means giving back to the
Society.
CSR is both critical and
controversial.
In India the Companies
for which any of the
criteria gets triggered are
required to mandatory to
spend in CSR activities.

3. Comply or
Explain to
Comply or pay
-Prior to Companies Amendment Act, 2019, CSR
was not mandatory at that time and the approach
was to “comply or explain”. If a company did not
comply, it only had to mention the reasons for
non-compliance in their report.
-Since there were serious compliance gaps, the
Companies (Amendment) Act 2019 introduced
punishments that included imprisonment, and
hence, the approach shifted from “comply or
explain” to “comply or pay fine”.
-Noncompliance of CSR provisions has been
notified as a civil wrong w.e.f. 22nd January, 2021.

4. Amendments
flow:
1 Apr. 2014
CSR
Provisions
got effective
on 01-04-
2014
2017
Companies
Amendment
Act
2018
Report of
High Level
Committee
2019
Companies
Amendment
Act
2020
Companies
Amendment
Act
2021
Companies
CSR
Amendment
Rules
2022
Companies
CSR
Amendment
Rules

5. Applicability of
CSR Provisions
Every Company having:
• Turnover: Rs. 1000 Cr. or more/
• Net Worth: Rs. 500 Cr. or more/
• Net Profit: Rs. 5 cr. or more
-Prior to Companies Amendment Act, 2017 the
thresholds were related to any financial year.
-After Companies Amendment Act 2017 the
trigger criteria are to be seen in respect of
financials of immediately preceding Financial Year

6. CSR
Expenditure
• Quantum of CSR Expenditure:
Where the Company is in existence for more than
3 years- Minimum 2% of the average net profits of
the company made during the three immediately
preceding financial years
Where the Company has not completed 3 years-
during such immediately preceding financial years
as per CSR Policy.

7. Limits of CSR
Expenditure
• 1) Administrative Overheads<=5% of the total CSR
Expenses of that year
• 2) In case of any surplus out of the CSR activities
then, shall not form part of CSR Business:
a)Ploughed back in the same CSR activity
b) Transfer to Unspent CSR Account, then spent in CSR
Activity and annual action plan of the Company
c) transfer such surplus amount to a Fund specified in
Schedule VII, within a period of six months of the expiry
of the financial yea

8. Set off excess
amount of
spending:
• If CSR Spendings more than the prescribed,
then such excess amount may be set off
against the requirement to spend immediate
succeeding three financial years subject to
the conditions that:
-the excess amount available for set off shall
not include the surplus arising out of the CSR
activities, if any.
-Board Resolution to this effect.

9. CSR Committee
A) In case of ID, >=3 directors with 1 ID mandatory
B) In case of no ID, >=2 directors
In case the CSR spendings comes below 50 lakhs, the
Company is not required to form a CSR Committee.
In case a company having any amount in its Unspent
Corporate Social Responsibility Account as per sub-
section (6) of section 135 shall constitute a CSR
Committee and comply with the provisions contained in
sub-sections (2) to (6) of the said section.

10. Constitution
of CSR
Committee
In case of Unlisted Public Companies: Three or more
directors, out of
which at least one shall be an independent director. However,
if there is no requirement of having an independent director
in the company, two or more directors.
Private Companies: Two or more directors. No independent
directors are required as mentioned in the proviso under
section 135(1).
Foreign Companies: At least two persons out of which:
(a) one shall be as specified under section 380(1)(d) of the
Act, and
(b) another shall be nominated by the foreign company.

11. Function of CSR
Committee:
• Formulate and recommend to the Board, a
Corporate Social Responsibility Policy which
shall indicate the activities to be undertaken
by the company
• recommend the amount of expenditure to be
incurred on the activities referred to in clause
(a)
• monitor the Corporate Social Responsibility
Policy of the company from time to time.
• formulate and recommend to the Board, an
annual action plan in pursuance of its CSR
policy,

12. Role of Board
Approve CSR Policy
disclose contents of such policy in its report and also place it on the company's website,
Ensure CSR Implementation
Ensure CSR Expenditure
the utilization of the disbursed CSR funds
Reason to be stated in Board’s Report for failure of non-spending CSR Expenditure

13. CSR not to
include the
following:
• Activities relating to normal course of business, except
the company engaged in R&D of new vaccine, drugs and
medical devices related to Covid for FYs: 20-21, 21-22
and 22-23, subject to fulfilment of following conditions;
A) R&D from any of the institutes mentioned in item xi of
Schedule VII
B)Separate disclosure in Annual Report on CSR of Board’s
Report
• Contribution to Political Party-Directly or indirectly
• Activity taken outside India, except training of Indian
Sportsperson representing at national or international
level.

14. • Activities benefitting employees of the
company as defined in clause (k) of section 2
of the Code on Wages, 2019.
• Activities supported by the companies on
sponsorship basis for deriving marketing
benefits for its products or services.
• Activities carried out for fulfilment of any
other statutory obligations under any law in
force in India

15. Schedule VII
• Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation
• Promoting education, including special education and employment enhancing vocation skills especially among children,
women, elderly and differently abled and livelihood enhancement projects.
• 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 by
socially and economically backward groups;
• iv. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro-forestry,
conservation of natural resources and maintaining quality of soil, air and water.
• 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, Central Armed Police Forces
(CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows

16. • Training to promote rural sports, nationally recognised sports, Paralympics sports and Olympic
sports;
• Contribution to the Prime Minister’s National Relief Fund or Prime Minister’s Citizen Assistance
and Relief in Emergency Situations Fund (PM CARES Fund, or any other fund set up by the
Central Government for socio-economic development and relief and welfare of the Scheduled
Castes, the Scheduled Tribes, other backward classes, minorities and women.
• Rural development projects.
• Slum area development
the company shall give preference to local areas and the areas around where it
operates

17. Which are the
funds specified
in Schedule VII
of the Act for
the purpose of
CSR
contribution?
•(i) Swachh Bharat Kosh
•(ii) Clean Ganga Fund
•(iii) Prime Minister’s National Relief Fund (PMNRF)
•(iv) Prime Minister’s Citizen Assistance and Relief in
Emergency Situations Fund (PM CARES Fund)
•(v) Any other fund set up by the Central Government
and notified by the Ministry of Corporate Affairs, for
socio-economic development and relief and welfare of
the Scheduled Castes, the Scheduled Tribes, other
backward classes, minorities and women.

18. Modes of CSR Implementation
Self-implementation.
Joint implementation with one or more companies.
Implementation through eligible implementing agencies.

19. Implementing agencies
• Any entity established under an Act of Parliament or a State legislature
• A Company established under the Act for charitable purposes or a
registered trust or a registered society.
- Either by Company- Singly or jointly; or
- Established by Central Govt. or State Govt. ;or
- Having a track record of atleast 3 years in undertaking similar activities.

20. CSR-1 and CSR-2
The Ministry of Corporate Affairs
(MCA) mandated entities undertaking
Corporate Social Responsibility (CSR)
to file eForm CSR-1 for all their CSR
projects from 1 April 2021.
Every company covered under the
provisions of sub-section (1) to
section 135 shall furnish a report on
Corporate Social Responsibility in
Form CSR-2 to the Registrar for the
preceding financial year (2020-2021)
and onwards as an addendum to
Form AOC-4.

21. Calculation
of Net
Profits
Net Profits are to be calculated as per Section 198 of the Act
Profit Before Tax (PBT) is used for computation of net profit
under section 135 of the Act.
Net Profit shall exclude the following:
-any profit arising from any overseas branch or branches of the
company, whether operated as a separate company or
otherwise
-any dividend received from other companies in India, which are
covered under and complying with the provisions of section 135
of the Act.

22. Treatment of Unspent CSR Amount
Nature of unspent
Amount
Action Required Timelines
Unspent amount pertains to
‘ongoing projects’
Transfer such unspent amount to
a separate bank account of the
company to be called as ‘Unspent
CSR Account’.
Within 30 days from the end of
the financial year.
Unspent amount pertains to
‘other than ongoing projects’
Transfer unspent amount to any
fund included in Schedule VII of
the Act.
Within 6 months from the end of
the financial year.

23. Annual Action Plan
The annual action plan, the CSR
Committee of the company is required
to provide for modalities of utilization of
funds. The CSR Committee shall
recommend to the Board on budget
allocation for any CSR project including
modalities of utilization of funds in
every project.
Further, as per rule 4(5) of the
Companies (CSR Policy) Rules, 2014, the
Board of a company shall satisfy itself
that the funds so disbursed have been
utilized for the purposes and in the
manner as approved by it and the Chief
Financial Officer or the person
responsible for financial management
shall certify to the effect.

24. Ongoing CSR
Activities
• Ongoing Project” means a multi-year project undertaken by a
Company in fulfilment of its CSR obligation having timelines
not exceeding three years excluding the financial year in which
it was commenced, and shall include such project that was
initially not approved as a multi-year project but whose
duration has been extended beyond one year by the board
based on reasonable justification;
• In case of ongoing project, the Board of a Company shall
monitor the implementation of the project with reference to
the approved timelines and yearwise allocation and shall be
competent to make modifications, if any, for smooth
implementation of the project within the overall permissible
time period.
• The provisions related to ongoing projects have come into
effect from 22nd January 2021, i.e., from FY 2020-21 onwards.
The said provisions are prospective in effect and not applicable
to projects of previous financial years.

25. FAQs on
CSR_MCA
notified
1) If CSR is applicable on Holding Company, will it be applicable to its
Subsidiary company or vice-versa?
No, the CSR provisions are Companies specific and hence the Company
fulfilling the eligibility criteria shall only be required to comply with CSR
Norms.
2) Whether provisions of CSR are applicable to a section 8 Company?
Yes, section 135(1) of the Act commences with the words “Every
company........” and thus applies to section 8 companies as well.
3) Whether CSR provisions apply to a company that has not completed the
period of three financial years since its incorporation?
Yes. If the company has not completed three financial years since its
incorporation, but it satisfies any of the criteria mentioned in section 135(1),
the CSR provisions including spending of at least two per cent of the
average net profits made during immediately preceding financial year(s)
are applicable.

26. Impact Assessment
(a) Every company having average CSR obligation of ten crore rupees or more in pursuance of
subsection (5) of section 135 of the Act, in the three immediately preceding financial years, shall
undertake impact assessment, through an independent agency, of their CSR projects having outlays of
one crore rupees or more, and which have been completed not less than one year before undertaking
the impact study.
(b) The impact assessment reports shall be placed before the Board and shall be annexed to the
annual report on CSR.
(c) A Company undertaking impact assessment may book the expenditure towards Corporate Social
Responsibility for that financial year, which shall not exceed two percent of the total CSR expenditure
for that financial year or fifty lakh rupees, whichever is higher.

27. 4) Can the company spend this amount in the said period of six months
on any CSR activity?
No, companies are not permitted to spend the unspent CSR amount,
other than the amount pertaining to ongoing projects, on any CSR
activity during the intervening period of six months after the end of the
financial year. Such unspent CSR amount is required to be transferred to
any fund included in Schedule VII of the Act.

28. Challenges faced in Practical
Identifying appropriate
Implementation agency
for CSR
Proper spending
Proper infrastructure

29. Disclosures
under Board’s
Report
• From 01-04-2020, CSR Report has been mandated as a
part of Annual Report with the following particulars:
- Brief outline on CSR Policy of the Company
- Composition of CSR Committee:
- The web-link(s) where Composition of CSR Committee,
CSR Policy and CSR Projects are disclosed.
- Impact Assessment of CSR Projects
- Average net profit of the company and CSR Expenditure.
- Surplus arising out of the CSR Projects of the previous
financial years.
- Details of Amount spent on CSR Projects, CSR Amount
spent or unspent for FY

30. • Details of the Excess set off
• Details of Unspent Corporate Social Responsibility
amount for the preceding three Financial Years
• Amount spent in administrative overheads and
impact assessment
• Details of unspent CSR amount for preceding three
financial years
• Details of CSR amount spent in financial year for
ongoing projects of the preceding financial year(s)
• Details of capital asset created or acquired through
CSR spent in a financial year (asset wise)
• Reason if the company has failed to spend 2% of the
average net profit

31. Non Compliance Penalty
• Company: Twice the unspent amount required to be transferred to any
fund included in Schedule VII of the Act or Unspent CSR Account, as the
case may be, or one crore rupees, whichever is less.
• Every Officer in Default: 1/10th of the unspent amount required to be
transferred to any fund included in Schedule VII of the Act or Unspent CSR
Account, or two lakh rupees, whichever is less.

32. Regulatory
actions on
CSR
• The Adjudicating Officer, Pranay Chaturvedi,
Registrar of Companies, NCT of Delhi & Haryana
appointed by the Ministry of Corporate Affairs
(MCA) recently imposed a penalty in total of
Rs.15,40,341.6/- on Comviva Technologies Ltd.
and its directors for the delay in transferring
Corporate Social Responsibility (CSR) fund.

33. Violation section Penalty imposed on
company/ director(s)
Calculation for
penalty amount
Maximum penalty can
be imposed
A B C D
u/s 135 (5) of the Companies Act,
2013
Comviva Technologies
Limited
5,50,122*2 = 11,00,244
OR Rs.1 crore
Whichever is lower
11,00,244
Manoranjan
Mohapatra,
CEO
5,50,122/10= 55,012.20
or 2 lakhs -Whichever is
less
55,012.20
Niraj Jain, CFO -do- 55,012.20
Parminder Singh
Bakshi, CS
-do- 55,012.20
Rajat Mukherjee,
Director
-do- 55,012.20
Vivek Satish Agarwal, -do- 55,012.20
Jagdish Mitra, Director -do- 55,012.20
Sunita Umesh, Director -do- 55,012.20
Manishkumar Murliman
ohar Vyas
-do- 55,012.20

34. THANK YOU
Contact: Shweta Dubey
(M):+91 8981475451/ +91 9123057374
(E-Mail): csshwetadubey@gmail.com