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As per Section 135 of The Companies’ Act, 2013, Corporate Social Responsibility means the activities undertaken by a company in pursuance of its statutory obligation laid down in section 135 of the Act in accordance with provisions contained in Rules, but shall not include the following;

i. Activities undertaken under normal course of business;

Provided that any company normally engaged in research and development activity of any new vaccine or drugs shall be included in CSR Activities.

ii. An activity undertaken by company outside India Except for training of Indian Sports personnel etc;

iii. Contribution of any amount to any political party;

iv. Activities benefitting employees of the company etc;

v. Activities supported by companies on sponsorship basis etc;

vi. Activities carried out for fulfillment of any other statutory obligations under any law in force in India.

Activities Specified under Schedule VII:

Activities which may be included by companies in their CSR Policies (Activities as specified under Schedule VII) are as follows:

1. Eradicating hunger, promoting health care etc.

2. Promoting education and employment enhancing vocation skills etc.

3. Promoting gender equality, empowering women, etc.

4. Ensuring environmental sustainability, animal welfare etc.

5. Protection of national heritage, art and culture etc.

6. Measures for the benefits of armed forces veterans, war widows, etc.

7. Training to promote rural sports,etc.

8. Contribution to Prime Minister’s National Relief Fund or Prime Minister’s Citizen Assistance,etc.

9. (a) Contribution to research development projects in the field of science, technology,

(b) Contribution to Public funded universities,Indian Institute of Technology, etc.

10. Rural development projects;

11. Slum Area Development;etc.

Applicability:

The provision of CSR apply if in the preceding financial year:

Net worth* of a company is 500 crore or more, or

Turnover of a company is 1000 crore or more, or

Net profit of a company is 5 crore or more.

Then, every company, its holding company, subsidiary company, and a foreign company shall have to constitute CSR Committee.

CSR COMMITTEE

CSR Committee means the Corporate Social Responsibility Committee constituted by the Board of Directors, constituting of 3 or more directors, out of which atleast 1 director shall be an independent director.

Amount of Contribution towards CSR:

According to Section 135(5)

The Board of Directors shall ensure that the Company spends, in every financial year a minimum of 2 % of the average net profits of the company made during the 3 immediately preceding financial years.

Transfer of Unspent Amount:

If not related to ongoing project-

If the Company fails to spend such amount, the Board shall in its Report, specify the reasons for not spending the amount and transfer such unspent amount to a separate Fund as specified in Schedule VII, within a period of 6 months of the expiry of financial year.

If related to ongoing project-

According to Section 135(6), any amount remaining unspent and relating to ongoing project shall be transferred to a special account to be opened in any scheduled bank to be called the Unspent Corporate Social Responsibility Account within a period of 30 days from the end of Financial Year.

Such Unspent amount shall be spent by the company towards CSR within a period of 3 Financial Years from the date of transfer to separate account, and if still remain unspent shall be transferred to the separate Fund as specified in Schedule VII, within a period of 30 days from the date of completion of 3rd Financial Year.

Set-off of Excess Amount spent towards Corporate Social Responsibility:

If the Company spends amount in excess of as required by law, then such excess amount may be set off against the requirement to spend towards CSR in succeeding Financial Years, as prescribed under Rule 7 of Companies (CSR) Rules, 2014.

Penalty

As per Section 135(7);

If the Company is in default in complying with the provisions of sec 135(5) & 135(6),

the company shall be liable to a penalty of:

• Twice the amount required to be transferred to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be; or

• 1 Crore Rupees;

Whichever is less.

Every Officer who is in default shall be liable to a penalty of:

• 1/10th of the amount required to be transferred by the company to such Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case maybe;or

• 2 Lakh Rupees;

Whichever is less.

CSR Implementation (Rule 4 of Companies (CSR) Rules, 2014):

The Board shall ensure that the CSR Activities are undertaken by the Company itself or through-

• A Company u/s 8 of the Act or a Trust or Society registered u/s 12A and 80G of the Income Tax Act, 1961.

• A Company u/s 8 of the Act or a registered Trust or Society, established by Central Government or State Government.

• Any entity established under an Act of Parliament or a State Legislature;

• A Company u/s 8 of the Act or a Trust or Society registered u/s 12A and 80G of the Income Tax Act, 1961 and having an established track record of at least 3 years in undertaking similar activities.

Filing of CSR-1:

Every entity, covered under Rule 4(1),shall register itself with the Central Government by filing Form CSR-1 with Registrar of Companies with effect from 1st day of April,2021;

Provided that the provisions of this sub-rule shall not affect the CSR projects or programmes approved prior to the 1st Day of April 2021.

(b) Form CSR 1 shall be verified digitally by a Chartered Accountant in practice or a Company Secretary in practice or a Cost Accountant in practice.

CSR Reporting:

The Board’s Report shall include an Annual Report on CSR containing particulars specified in Annexure I or Annexure II, as applicable.