Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Who must comply
Companies crossing any of the ₹500cr net worth / ₹1,000cr turnover / ₹5cr profit thresholds.
2% spend + CSR-2
Spend 2% of average net profit on permitted activities and report it in Form CSR-2. Confirm current rules.
How CSR works in practice, and the tightening
CSR under Section 135 has become more structured, so it’s worth knowing how it now runs. A company crossing any one of the thresholds — net worth of ₹500 crore, turnover of ₹1,000 crore, or net profit of ₹5 crore in the immediately preceding financial year — must spend at least 2% of its average net profit of the preceding three years on activities in the permitted Schedule VII areas (education, health, poverty, environment and the like), and constitute a CSR committee where applicable. Recent changes made the spend effectively mandatory rather than ‘comply or explain’: any unspent amount tied to an ongoing project must be moved to a separate Unspent CSR Account within 30 days and used within three years, and unspent amounts not linked to an ongoing project go to a specified government fund. The activities must generally be carried out through entities registered with the MCA via Form CSR-1 (which is where a charitable trust or Section 8 company seeking CSR funds comes in), and the company reports its CSR in Form CSR-2 and in the board’s report. Penalties apply for non-compliance. For trusts, being CSR-1 registered is what makes them eligible to receive corporate CSR funds. Confirm the current thresholds and rules, which have been amended several times.