A brief description of CSR Legislation specifically for India.

1. CSR Indian Legislation
Dr. Madhavi V. Peddada
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2. Companies Act, 2013: Sec 135
Companies Act 1956, 26 chapters, 658 sections enabled the companies to be
constituted by registration setting out responsibilities of companies, their directors
and secretaries and made available procedures for its winding
To make companies Act more contemporary and relevant to the key stakeholders
Companies Act, 2013, 29 chapters, 470 sections, 7 schedules
Chapter IX - Section 135 and Schedule VII are related to CSR
Companies (Corporate Social Responsibility) Rules, 2014
The Companies (Amendment) Act, 2019
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3. CSR Legislation: India
The Ministry of Corporate Affairs, 2009 issued Corporate Social Responsibility
Voluntary Guidelines
In 2013 CSR was made mandatory for company (holding, subsidiary & foreign) making
a net worth of INR 2500 crore or more; or
a turnover of INR 1000 crore or more; or
a net profit of INR 5 crore; or more
during any financial year
net worth - the total wealth of an individual, company, or household, taking account of all financial assets and liabilities
turnover - pure income a company makes from sales
net profit - balance amount remaining after deducting expenses, both variable and fixed
The company in every financial year has to spend 2% of the average net profits made
during the 3 immediate preceding financial year
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4. CSR Legislation: India
Board take into account; approve; disclose in report & website; ensure activities are
undertaken and the specified amount is spent in every financial year
Company preference to the local areas and areas around it where it operates
The company activities in India according to Schedule VII of the Companies Act, 2013 is
considered as CSR activities
According to section 135 of the Companies Act, 2013 CSR Committee with at least three
directors, including an independent director should be formed. Under section 134 (3)
the board needs to report the composition of CSR committee.
Committee should recommend and formulate to Board a CSR policy as per Schedule VII;
amount of expenditure to be incurred; monitor
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5. CSR Legislation: India
Government monitors CSR activities of the companies through its MCA portal
Excess amount spent on CSR can be set off from 22 January 2021 if conditions
mentioned under Rule 7(3) of the Companies (CSR Policy) Amendment Rules, 2014.
Surplus income generated from CSR activities utilized for CSR activities only
Non-compliance leads the company to a minimum fine of INR 50,000 to INR 25 Lakhs
Officer in-charge liable for imprisonment for one to three years and a minimum fine
of INR 50,000 to INR 5 Lakhs
CSR activities reporting is to be done annually as per the Companies (CSR Policy)
Amendment Rules, 2014
Company if fails to spend, the Board will report under clause 134 specifying the reason
for not spending the amount; transfer unspent amount to a Fund specified in Schedule
VII within 6 months of the expiry of financial year
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7. According to Rule 2(1)(d) of Companies (CSR Policy) Rules, 2014 excludes the
following activities from being considered as eligible CSR activity
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8. Companies (CSR Policy) Amendment Rules, 2021
Registration: Electronic Registration (form CSR-1) with the registrar (Central Government)
The same has to be verified digitally by a CA, CS or Cost Accountant in practice
Action plan: List of CSR activities approved; to be undertaken in areas or subjects as
specified in Schedule VII and the manner of execution of projects/programmes
Impact Assessment: CSR obligation of 10 crore required to hire an independent agency;
projects of 1 crore or more need to have an impact assessment. 5% of the CSR
expenditure for the year or INR 50 lakhs can be counted under CSR expenditure for the
year
Transparency: CSR committee composition; CSR policy & projects approved should be
mandatorily disclosed on website for public access
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9. CSR project abandoned by the implementing agency due to lack of funds can be
considered as a multi-year project provided a valid justification is provided & if required
the Board can alter the action plan
Project is considered as ongoing once concrete steps are taken
CSR activities can be undertaken by self; joint implementation with one or more cos.;
eligible implementing agencies
Companies (CSR Policy) Amendment Rules, 2021
Impact assessment can be done through an international organization
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