Skip to Content

CSR Compliance – Corporate Social Responsibility

Who Files This?

Companies meeting CSR thresholds under Section 135 of the Companies Act, 2013 must spend 2% of average net profits of the last 3 years on eligible CSR activities.

Applicability Criteria

CSR applies if during any financial year, a company has:

  • Net worth ≥ ₹500 crore, OR

  • Turnover ≥ ₹1,000 crore, OR

  • Net profit ≥ ₹5 crore.

Why It Matters

CSR builds a company’s brand reputation, goodwill, and social credibility, while fulfilling its legal responsibility towards society.

Process of Compliance

  1. Constitute a CSR Committee (except in some private/unlisted companies where exemptions apply).

  2. Prepare and approve a CSR Policy aligned with Schedule VII activities.

  3. Allocate 2% of average net profits towards CSR.

  4. Spend the amount and disclose details in Board’s Report.

  5. File CSR-2 with MCA (by 31st March of next FY).

Penalty for Non-Compliance

  • Unspent amount (other than ongoing projects) must be transferred to specified funds within 6 months.

  • Penalty = twice the unspent amount or ₹1 crore (whichever is less) for the company.

  • Officers in default: Penalty = one-tenth of unspent amount or ₹2 lakh (whichever is less).

How LTC Helps

  • Assessing CSR applicability.

  • Drafting CSR Policy and guiding project selection.

  • Monitoring CSR spends and ensuring proper accounting.

  • Filing CSR-2 and reporting in Board’s Report.