Overview
A company covered by Section 135 must spend at least 2% of its average net profits of the preceding three financial years on activities listed in Schedule VII of the Companies Act, 2013. It must do so according to a board-approved CSR policy and annual action plan. Unspent amounts must be transferred to an Unspent CSR Account (for ongoing projects) within 30 days of the end of the financial year, or to a Schedule VII fund within six months. The spending is reported in the board’s report and in Form CSR-2.
Applicability
A company is covered if, in the immediately preceding financial year, it had any one of the following:
- Net worth of ₹500 crore or more.
- Turnover of ₹1,000 crore or more.
- Net profit of ₹5 crore or more.
Who Needs This Service?
Companies newly crossing the thresholds, companies with unspent balances or ongoing projects, and groups that implement CSR through foundations or Section 8 companies.
CSR in Chennai / Tamil Nadu
The statutory CSR framework is national. For companies in Tamil Nadu, projects are frequently implemented through local trusts and Section 8 companies. Before any funds are released, check that the agency is registered in CSR-1 and has the necessary 12A/80G-equivalent registrations.
CSR Implementation Routes Compared
A company can deliver CSR in several ways.
| Route | Description |
|---|---|
| Direct | The company runs the project itself |
| Implementing agency | A registered agency carries out the project |
| Own trust or Section 8 company | A body set up by the company runs the project |
| Collaboration | Companies pool funds for a joint project |
Key Requirements
- CSR Committee: At least three directors, including one independent director where one is required. It is not needed where the CSR obligation does not exceed ₹50 lakh, in which case the board discharges the committee’s functions.
- CSR policy and annual action plan: Approved by the board.
- Eligible activities: Only Schedule VII activities qualify. Activities in the normal course of business, activities benefiting only employees, political contributions and activities outside India (with limited exceptions) are excluded.
- Implementing agencies: Must be registered with the MCA in Form CSR-1.
- Administrative overheads: Capped at 5% of total CSR expenditure.
- Impact assessment: Required for companies with an average CSR obligation of ₹10 crore or more in the three preceding years, for projects of ₹1 crore or more that were completed at least a year before.
- Excess spend: Can be set off against the obligation in the following three financial years.
- Chief Financial Officer certification: The CFO must certify that funds were used for the approved purposes.
- Reporting: The annual CSR report is annexed to the board’s report, and Form CSR-2 is filed.
Documents Required
The financial statements for three years, the net-profit computation under Section 198, board and committee resolutions, the CSR policy, agreements with implementing agencies, utilisation certificates, and impact assessment reports.
CSR Documents and Filings by Stage
Each stage has its own record.
| Stage | Document or filing |
|---|---|
| Policy | Board-approved CSR policy |
| Planning | Annual action plan |
| Agency registration | Form CSR-1 for implementing agencies |
| Reporting | CSR report and annual reporting form |
| Unspent amounts | Transfer to the prescribed account within the time allowed |
How KVA Handles CSR Compliance and Project Governance
Karthick Vijayakumar & Associates, Company Secretaries, supports you through each stage with a single point of contact and a clear record of what has been done.
| Step | Stage | What KVA does |
|---|---|---|
| 1 | Requirement review | We understand your entity, objective and timeline, and confirm what CSR Compliance and Project Governance involves for your specific facts. |
| 2 | Document checklist | You receive a clear list of documents, particulars and approvals needed, with gaps flagged early. |
| 3 | Preparation and filing | Our team prepares, reviews and files the required forms and records, and tracks each acknowledgement. |
| 4 | Completion and follow-up | We hand over final records and explain the compliance that follows, so nothing is missed afterwards. |
Penalties
Failure to transfer unspent amounts attracts a penalty on the company of twice the amount required to be transferred, or ₹1 crore, whichever is less. Officers in default face a penalty of one-tenth of that amount, or ₹2 lakh, whichever is less.
Why Karthick Vijayakumar & Associates
Work is handled by company secretaries who deal with statutory filings and governance every day.
Timelines for CSR Compliance and Project Governance are tracked so that approvals and filings do not slip.
Plain-language updates at each stage, with no guesswork about what is pending.
Organised, decision-ready documentation that supports audits, banks and future filings.
Frequently Asked Questions
Companies with net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more in the preceding financial year.
It is 2% of the average net profits of the three immediately preceding financial years, computed under Section 198.
No. It is not required if the CSR obligation does not exceed ₹50 lakh, and in that case the board performs its functions.
For ongoing projects, it is transferred to an Unspent CSR Account within 30 days of the financial year end and spent within three years. Other unspent amounts go to a Schedule VII fund within six months.
A multi-year project, lasting up to three years excluding the year of commencement, that the board has approved as ongoing.
Yes, if the foundation is a Section 8 company, registered trust or registered society that is registered with CSR-1 and meets the conditions in the Rules.
Activities benefiting only employees and their families are not CSR.
It is mandatory only for companies with an average CSR obligation of ₹10 crore or more, for projects of ₹1 crore or more. The cost is allowed as CSR expenditure, within limits.
Yes. It can be set off against the obligation in up to three succeeding financial years, subject to conditions.
The CSR reporting form that covered companies file with the MCA, giving details of their CSR spending.
Yes, subject to conditions on who holds the asset, for example the beneficiaries, a CSR-registered implementing agency or a public authority.
Five percent of the total CSR expenditure for the financial year.
Contributions to the funds listed in Schedule VII qualify as CSR expenditure.
A company must comply if in the immediately preceding financial year it had net worth of Rs 500 crore or more, turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more.
The CSR Committee recommends it and the board approves it, listing projects, manner of execution, fund utilisation and monitoring mechanism.
An account into which unspent CSR for ongoing projects is transferred within thirty days of year-end, to be spent within three financial years.
It must be transferred to a fund specified in Schedule VII within six months of the end of the financial year.
No. CSR must be spent in India, with the preference given to local areas around the company’s operations.
No. Contributions to political parties are not CSR activities, nor are activities benefiting only employees and their families.
To formulate and recommend the CSR policy, recommend the amount, and monitor implementation, where a committee is required to be constituted.
Need Support With CSR Compliance?
Contact Karthick Vijayakumar & Associates to review your CSR applicability, policy and reporting requirements.
Contact UsSpeak with Karthick Vijayakumar & Associates
Third Floor, New No. 599, Old No. 230, Konnur High Road, Ayanavaram, Chennai, Tamil Nadu, 600023, India
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