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CSR Compliance Services

CSR Compliance Services
Corporate Social Responsibility Under Section 135

Ensure complete CSR compliance under Section 135 of the Companies Act, 2013. Our experts help you formulate CSR policies, manage spending obligations, and maintain regulatory compliance.

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CSR Policy Formulation
CSR Committee Formation
Mandatory 2% Spending
Annual Action Plan
Impact Assessment
Compliance Reporting
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CSR Overview

What is Corporate Social Responsibility?

Corporate Social Responsibility (CSR) means the voluntary contributions made by companies to a better society and a cleaner environment. It is a concept whereby companies integrate social and other useful concerns in their business operations for the betterment of their stakeholders and society in general.

Section 135 of the Companies Act, 2013 provides that certain companies must mandatorily contribute a certain amount towards CSR activities as a statutory obligation.

Applicability

CSR Applicability in India

CSR provisions apply to companies meeting any of the following criteria in the preceding financial year

Net Worth
₹500 Crore+

Companies with net worth of more than ₹500 crore

Turnover
₹1000 Crore+

Companies with turnover of more than ₹1000 crore

Net Profit
₹5 Crore+

Companies with net profit of more than ₹5 crore

Benefits

Importance and Benefits of CSR

CSR provides numerous benefits to companies beyond regulatory compliance

Enhanced Public Image

CSR improves public image by publicizing efforts towards a better society

Increased Media Coverage

Media visibility throws a positive light on the organization

Enhanced Brand Value

Building socially strong relationships with customers enhances brand value

Competitive Advantage

Companies stand out from competition when involved in community activities

Board Responsibilities

Role of Board of Directors

Key Board Responsibilities
  • Approve CSR policy after considering CSR Committee recommendations
  • Disclose CSR Policy contents on company website
  • Ensure only activities mentioned in policy are undertaken
  • Ensure minimum 2% spending of average net profits of preceding three years
  • Disclose CSR Committee composition in Board's Report
  • Provide reasons for unspent amount and transfer details
  • Monitor compliance with CSR provisions
Permitted Activities

Permitted CSR Activities Under Schedule VII

Companies can undertake activities specified in Schedule VII of the Companies Act, 2013

Poverty & Health
  • Eradicating poverty, hunger and malnutrition
  • Promoting health care including preventive health care
  • Contribution to Swachh Bharat Kosh
  • Making available safe drinking water
Education & Skills
  • Improvement in education including special education
  • Employment strengthening vocation skills
  • Skill development for children, women, elderly
  • Livelihood enhancement projects
Gender Equality
  • Improving gender equality
  • Setting up homes and hostels for women and orphans
  • Empowering women
  • Setting up old age homes and day care centres
Environment
  • Safeguarding environmental sustainability
  • Ecological balance and protection of flora and fauna
  • Conservation of natural resources
  • Contribution for rejuvenation of river Ganga
Heritage & Culture
  • Protection of national heritage, art and culture
  • Restoration of historical buildings and sites
  • Setting up public libraries
  • Promotion of traditional arts and handicrafts
Armed Forces
  • Measures for armed forces veterans and war widows
  • Support to Central Armed Police Forces veterans
  • Benefits to dependents including widows
  • Training and welfare programs
CSR Committee

CSR Committee Requirements

Committee Composition
  • Minimum 3 directors (2 for companies with only 2 directors)
  • At least 1 independent director (where applicable)
  • Foreign companies: 2 persons including 1 India resident
  • Must meet at least twice in a year
Committee Duties
  • Formulate and recommend CSR policy to Board
  • Recommend amount of expenditure for CSR activities
  • Monitor CSR policy implementation
  • Establish transparent monitoring mechanism
  • Prepare annual action plan in April each year
Compliance Process

Step-by-Step CSR Compliance Process

Comprehensive process for ensuring complete CSR compliance

1
CSR Committee Formation

Constitute CSR Committee with required directors

  • Minimum 3 directors (or 2 if only 2 directors)
  • At least 1 independent director
  • Meet at least twice per year
  • Document committee formation
2
CSR Policy Development

Formulate comprehensive CSR policy

  • Include Schedule VII activities
  • Define implementation approach
  • Establish monitoring mechanism
  • Get Board approval and publish on website
3
Annual Action Plan

Prepare detailed annual action plan

  • Plan CSR activities for the year
  • Budget allocation and timelines
  • Identify implementing agencies
  • Get Board approval
4
Implementation & Reporting

Execute CSR activities and maintain compliance

  • Ensure 2% spending obligation
  • Monitor project implementation
  • File Form CSR-2 with MCA
  • Annual reporting in Board's Report
Penalties

Fines and Penalties for Non-Compliance

Company Non-Compliance
₹1 crore or twice the unspent amount (whichever is less)

For failure to comply with CSR spending, transfer or utilization

Officer Default
₹2 lakh or one-tenth of unspent amount (whichever is less)

For officers who default in CSR compliance

Recent Updates

Recent CSR Amendments (2021-2022)

Key Amendment Highlights
  • CSR Committee exemption for companies with CSR obligation ≤ ₹50 lakhs
  • Mandatory CFO certification for CSR fund utilization
  • Filing of Form CSR-2 as addendum to annual filing
  • Administrative overheads capped at 5% of total CSR expenditure
  • Impact assessment mandatory for companies with average CSR ≥ ₹10 crore
  • Excess CSR spending can be set off for 3 subsequent years
Frequently Asked Questions

Frequently Asked Questions

Get answers to common questions about CSR compliance

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Ensure complete CSR compliance under Section 135 of the Companies Act. Connect with our experts for comprehensive CSR policy formulation, implementation, and regulatory compliance.