Corporate Social Responsibility (CSR) isn’t just a legal requirement—it’s a powerful commitment by companies to create a positive impact on society, the environment, and the economy. In India, CSR is not just about profit margins; it’s about building trust, creating opportunities, and driving meaningful change.

—

1. Who Needs to Follow CSR Rules?

Companies meeting any one of the following criteria in a financial year must comply with CSR:

✅ Net Worth: ₹500 crore or more
✅ Turnover: ₹1,000 crore or more
✅ Net Profit: ₹5 crore or more

Such companies must:

Form a CSR Committee.

Spend at least 2% of their average net profit (of the last 3 years) on CSR activities.

 Did you know? Companies can’t spend CSR funds on their regular business activities—it must go towards genuine social impact initiatives.

—

 2. The Role of the CSR Committee

Every eligible company must set up a CSR Committee with:
✅ At least 3 Directors (1 Independent Director is mandatory for public companies).
✅ Responsibilities:

Create and monitor the CSR Policy.

Recommend specific CSR activities and budgets.

Ensure transparent implementation of CSR projects.

 Quick Fact: Unlisted or private companies can operate with just 2 Directors on their CSR committee.

—

 3. What Counts as CSR Activities? (Schedule VII Highlights)

CSR funds must be directed toward activities that create real societal value, including:

✅ Fighting Hunger & Malnutrition: Feeding programs and nutritional drives.
✅ Promoting Education: Scholarships, school infrastructure, digital literacy.
✅ Environmental Sustainability: Clean energy, waste management, reforestation.
✅ Gender Equality: Women empowerment programs.
✅ Healthcare Initiatives: Free medical camps, sanitation, clean water projects.
✅ Sports Promotion: Support for sports training and facilities.
✅ Support for National Funds: Contributions to PM CARES Fund and similar initiatives.

❌ Excluded: Donations to political parties or activities benefiting only employees.

—

 4. CSR Expenditure: How Much to Spend?

✅ Companies must allocate 2% of their average net profit (last 3 financial years) towards CSR.
✅ Unspent CSR funds:

Transferred to a separate CSR account within 30 days.

If still unused, sent to a Government-specified fund within 6 months.

 Transparency Alert: Surplus CSR funds cannot become part of business profits—they must be reinvested in CSR initiatives.

—

 5. CSR Reporting: Accountability Matters

✅ Companies must publish a detailed CSR report as part of their Annual Report.
✅ The report must include:

CSR Policy highlights.

Details of projects and funds spent.

Justification for any under-spending.

✅ Form CSR-2: A mandatory annual compliance form must be filed with the Ministry of Corporate Affairs (MCA).

—

⚖️ 6. Penalties for Non-Compliance

 Company Penalty: ₹50,000 to ₹25,00,000
 Officer Penalty: Fine up to ₹5,00,000 and/or imprisonment up to 3 years

 Tip: Proactive CSR implementation isn’t just about avoiding penalties; it’s about building a trustworthy brand image.

—

️ 7. Collaboration with NGOs & Trusts

✅ CSR funds can be channeled through:

Registered NGOs

Section 8 Companies (Non-Profit Organizations)

Registered Trusts/Societies with at least 3 years of proven track record

✅ Mandatory MCA Registration for all implementing agencies.

 Real Impact: Collaborating with experienced NGOs ensures that every rupee spent creates maximum social impact.

—

 8. Recent Updates in CSR Rules (2021 Onwards)

✅ Impact Assessments: Mandatory for companies spending ₹10 crore or more on CSR projects.
✅ Administrative Overheads: Capped at 5% of total CSR expenditure.
✅ Enhanced Transparency: Detailed disclosures about CSR projects and spending are now required.

—

 Why CSR is More Than Just a Legal Obligation?

✅ Stronger Brand Reputation
✅ Better Stakeholder Trust
✅ Attracting Investors and Customers
✅ Increased Employee Engagement and Retention
✅ Sustainable Long-Term Growth

 A Thought to Ponder: “CSR isn’t an expense; it’s an investment in society and the future.

—

—