valid as on 05/12/2019

Section 135. Corporate Social Responsibility
Effective from 01-04-2014

(1) Every  having  of rupees five hundred crore or more, or  of rupees one thousand crore or more or a net profit of rupees five crore or more during any   shall constitute a of the Board consisting of three or more  , out of which at least one director shall be an .

where a company is not required to appoint an independent director under sub-section (4) of section 149, it shall have in its Corporate Social Responsibility Committee two or more directors.

(2) The Board’s report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.

(3) The Corporate Social Responsibility Committee shall,—

(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in ;

(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and

(c) monitor the Corporate Social Responsibility Policy of the company from time to time.

(4) The Board of every company referred to in sub-section (1) shall,—

(a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner ; and

(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company.

(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every , at least two per cent. of the average net profits of the company made during the three immediately preceding financial years,  in pursuance of its Corporate Social Responsibility Policy:

Provided that the company shall give preference to the around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:

Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount .

Explanation.—For the purposes of this section “average net profit” shall be calculated in accordance with the provisions of section 198.

.—For the purposes of this section “net profit” shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of section 198.

Any amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in persuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.

If a company contravenes the provisions of sub-section (5) or sub-section (6), the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of such company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.

The Central Government may give such general or special directions to a company or class of companies as it considers necessary to ensure compliance of provisions of this section and such company or class of companies shall comply with such directions.

MCA has extended the due date for submission of report by three months w.e.f., 04.03.2019 vide its Circular dated 08.03.2019. To view the Circular, Click Here.

MCA has re constituted High Level Committee on CSR vide Office Order dated 22.11.2018. To view the Office Order, Click Here .

MCA has constituted High Level Committee on CSR vide Office Order dated 28.09.2018. The Committee got re-constituted vide  Office Order dated 11.10.2018 To view the Office Order, Click Here.

This section shall not apply for a period of five years from the commencement of business of a Specified IFSC public company and IFSC Private Company vide GSR 8(E)and GSR 9(E) dated 04.01.2017.To view the notification Click Here

2(20) Company means a company incorporated under this Act or under any previous company law
2(57) Net Worth, means the aggregate value of the paid-up share capital and all reserves created out of the profits, securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation
2(91) Turnover means the gross amount of revenue recognized in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year;
2(42) Financial year, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up:

Provided that on an application made by a company or body corporate, which is a holding company or a subsidiary of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether or not that period is a year:

Provided further that a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause

Provided also that in case of a Specified IFSC public company, which is a subsidiary of a foreign company, the financial year of the subsidiary may be same as the financial year of its holding company and approval of the Tribunal shall not be required.

Provided also that in case of a Specified IFSC private company, which is a subsidiary of a foreign company, the financial year of the subsidiary may be same as the financial year of its holding company and approval of the Tribunal shall not be required.

Substituted vide Companies (Amendment) Act, 2017 dated 03.01.2018, effective from 19.09.2018. To view the notification,Click Here
Refer Corporate Social Responsibility Policy Rules,2014.To view the rule,Click Here
2(34) Director means a director appointed to the Board of a company
2(47) Independent director means an independent director referred to in sub-section (5) of section 149
Inserted vide Companies (Amendment) Act, 2017 dated 03.01.2018, effective from 19.09.2018. To view the notification,Click Here
To view the Schedule,Click Here
Substituted vide Companies (Amendment) Act, 2017 dated 03.01.2018, effective from 19.09.2018. To view the notification,Click Here
Refer rule 9 of the Companies (Accounts) Rules,2014.To view the rule,Click Here
2(41) Financial Year, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up:

Provided that on an application made by a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether or not that period is a year:

Provided further that a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause

Provided also that in case of a Specified IFSC public company, which is a subsidiary of a foreign company, the financial year of the subsidiary may be same as the financial year of its holding company and approval of the Tribunal shall not be required.

Provided also that in case of a Specified IFSC private company, which is a subsidiary of a foreign company, the financial year of the subsidiary may be same as the financial year of its holding company and approval of the Tribunal shall not be required.

Inserted vide the Companies (Amendment) Act, 2019 dated 31.07.2019 (Not yet Notified). To view the Amendment Act, Click Here.
MCA has clarified that this provision should be followed in letter and spirit vide General Circular No. 06/2018 dated 28.05.2018. To view the Circular, Click Here
 Inserted vide the Companies (Amendment) Act, 2019 dated 31.07.2019 (Not yet Notified). To view the Amendment Act, Click Here.
Inserted vide Companies (Amendment) Act, 2017 dated 03.01.2018, effective from 19.09.2018. To view the notification,Click Here
 Inserted vide the Companies (Amendment) Act, 2019 dated 31.07.2019 (Not yet Notified). To view the Amendment Act, Click Here.
 Inserted vide the Companies (Amendment) Act, 2019 dated 31.07.2019 (Not yet Notified). To view the Amendment Act, Click Here.
 Inserted vide the Companies (Amendment) Act, 2019 dated 31.07.2019 (Not yet Notified). To view the Amendment Act, Click Here.

9.1.9 Companies (Accounts) Rules,2014

9. Disclosures about CSR Policy.-

The disclosure of contents of Corporate Social Responsibility Policy in the Board’s report and on the company’s website, if any, shall be as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014.


9.4.1- Companies (Corporate Social Responsibility Policy) Rules, 2014

1. Short title and commencement. –

(1) These rules may be called the Companies (Corporate Social Responsibility Policy) Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.


9.4.2- Companies (Corporate Social Responsibility Policy) Rules, 2014

2. Definitions.-

(1) In these rules, unless the context otherwise requires, –

(a) “Act” means the Companies Act, 2013;

(b) “Annexure” means the Annexure appended to these rules;

(c) “Corporate Social Responsibility (CSR)” means and includes but is not limited to :-

(i) Projects or programs relating to activities specified in Schedule VII to the Act; or
(ii) Projects or programs relating to activities undertaken by the board of directors of a company (Board) in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will cover subjects enumerated in Schedule VII of the Act.

(d) “CSR Committee” means the Corporate Social Responsibility Committee of the Board referred to in section 135 of the Act.

(e) “CSR Policy” relates to the activities to be undertaken by the company as specified in Schedule VII to the Act and the expenditure thereon,excluding activities undertaken in pursuance of normal course of business of a company;

(f) “Net profit” means the net profit of a company as per its financial statement prepared in accordance with the applicable provisions of the Act, but shall not include the following, namely :-

(i) any profit arising from any overseas branch or branches of the company, whether operated as a separate company or otherwise; and
(ii) any dividend received from other companies in India, which are covered under and complying with the provisions of section 135 of the Act:

Provided that net profit in respect of a financial year for which the relevant financial statements were prepared in accordance with the provisions of the Companies Act, 1956, (1 of 1956) shall not be required to be re-calculated in accordance with the provisions of the Act:

Provided further that in case of a foreign company covered under these rules, net profit means the net profit of such company as per profit and loss account prepared in terms of clause (a) of subsection (1) of section 381 read with section 198 of the Act.

(2) used and not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act.

Inserted vide Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018, dated 19.09.2018. To view the notification,Click Here
Substituted vide Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018, dated 19.09.2018. To view the notification,Click Here
 words and expressions used and not defined in this Act but defined in the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) shall have the meanings respectively assigned to them in those Acts

9.4.3- Companies (Corporate Social Responsibility Policy) Rules, 2014

3. Corporate Social Responsibility. –

(1) Every company including its holding or subsidiary, and a foreign company defined under clause (42) of section 2 of the Act having its branch office or project office in India, which fulfills the criteria specified in sub-section (1) of section 135 of the Act shall comply with the provisions of section 135 of the Act and these rules:

Provided that net worth, turnover or net profit of a foreign company of the Act shall be computed in accordance with balance sheet and profit and loss account of such company prepared in accordance with the provisions of clause (a) of sub-section (1) of section 381 and section 198 of the Act.

(2) Every company which ceases to be a company covered under sub-section (1) of section 135 of the Act for three consecutive financial years shall not be required to –

(a) constitute a CSR Committee; and
(b) comply with the provisions contained in sub-section (2) to (5) of the said section,till such time it meets the criteria specified in sub-section (1) of section 135.


9.4.4- Companies (Corporate Social Responsibility Policy) Rules, 2014

4. CSR Activities.-

(1) The CSR activities shall be undertaken by the company, as per its stated CSR Policy, as projects or programs or activities (either new or ongoing), excluding activities undertaken in pursuance of its normal course of business.

The Board of a company may decide to undertake its CSR activities approved by the CSR Committee, through

(a) a company established under section 8 of the Act or a registered trust or a registered society, established by the company, either singly or alongwith any other company, or

(b) a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government or any entity established under an Act of Parliament or a State legislature :

Provided that- if, the Board of a company decides to undertake its CSR activities through a company established under section 8 of the Act or a registered trust or a registered society, other than those specified in this sub-rule, such company or trust or society shall have an established track record of three years in undertaking similar programs or projects; and the company has specified the projects or programs to be undertaken, the modalities of utilisation of funds of such projects and programs and the monitoring and reporting mechanism.

(2) The Board of a company may decide to undertake its CSR activities approved by the CSR Committee, through a registered trust or a registered society or a company [established by the company or its holding or subsidiary or associate company under section 8 of the Act or otherwise] 

Provided that—

(i) if such trust, society or company is [not established by the company or its holding or subsidiary or associate company ] shall have an established track record of three years in undertaking similar programs or projects;

(ii) the company has specified the project or programs to be undertaken through these entities, the modalities of utilization of funds on such projects and programs and the monitoring and reporting mechanism.

(3) A company may also collaborate with other companies for undertaking projects or programs or CSR activities in such a manner that the CSR Committees of respective companies are in a position to report separately on such projects or programs in accordance with these rules.

(4) Subject to provisions of sub-section (5) of section 135 of the Act, the CSR projects or programs or activities undertaken in India only shall amount to CSR Expenditure.

(5) The CSR projects or programs or activities that benefit only the employees of the company and their families shall not be considered as CSR activities in accordance with section 135 of the Act.

(6) Companies may build CSR capacities of their own personnel as well as those of their Implementing agencies through Institutions with established track records of at least three financial years but such expenditure  shall not exceed five percent. of total CSR expenditure of the company in one financial year.

(7) Contribution of any amount directly or indirectly to any political party under section 182 of the Act, shall not be considered as CSR activity.

Substituted vide notification No. G.S.R. 540 (E) dated 23rd May,2016. To view the notification,Click Here
 Substituted vide notification No. G.S.R. 43 (E) dated 19th January, 2015. To view the notification,Click Here
Substituted vide notification No. G.S.R. 43 (E) dated 19th January, 2015. To view the notification,Click Here
Inserted by the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2014 vide notification no.G.S.R. 644(E) dated 12 September 2014. To view the notification,Click Here

9.4.5- Companies (Corporate Social Responsibility Policy) Rules, 2014

5. CSR Committees.-

(1) The companies mentioned in the rule 3 shall constitute CSR Committee as under.-

(i) an unlisted public company or a private company covered under sub-section (1) of section 135 which is not required to appoint an independent director pursuant to sub-section (4) of section 149 of the Act, shall have its CSR Committee without such director ;

(ii) a private company having only two directors on its Board shall constitute its CSR Committee with two such directors;

(iii) with respect to a foreign company covered under these rules, the CSR Committee shall comprise of at least two persons of which one person shall be as specified under clause (d) of sub-section (1) of section 380 of the Act and another person shall be nominated by the foreign company.

(2) The CSR Committee shall institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the company.

Substituted vide Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018, dated 19.09.2018. To view the notification,Click Here

9.4.6- Companies (Corporate Social Responsibility Policy) Rules, 2014

6. CSR Policy.-

(1) The CSR Policy of the company shall, inter-alia, include the following, namely :-

(a) a list of CSR projects or programs which a company plans to undertake  falling within the purview of the Schedule VII of the Act, specifying modalities of execution of such project or programs and implementation schedules for the same; and

(b) monitoring process of such projects or programs:

Provided that the CSR activities does not include the activities undertaken in pursuance of normal course of business of a company.

Provided further that the Board of Directors shall ensure that activities included by a company in its Corporate Social Responsibility Policy are related to the activities included in Schedule VII of the Act.

(2) The CSR Policy of the company shall specify that the surplus arising out of the CSR projects or programs or activities shall not form part of the business profit of a
company.

Substituted vide Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018, dated 19.09.2018. To view the notification,Click Here
Substituted vide Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018, dated 19.09.2018. To view the notification,Click Here

9.4.7- Companies (Corporate Social Responsibility Policy) Rules, 2014

7. CSR Expenditure.-

CSR expenditure shall include all expenditure including contribution to corpus, for projects or programs relating to CSR activities approved by the Board on the recommendation of its CSR Committee, but does not include any expenditure on an item not in conformity or not in line with activities which fall within the purview of Schedule VII of the Act.

Substituted vide Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018, dated 19.09.2018. To view the notification,Click Here

9.4.8- Companies (Corporate Social Responsibility Policy) Rules, 2014

8. CSR Reporting.-

(1) The Board’s Report of a company covered under these rules pertaining to a financial year commencing on or after the 1st day of April, 2014 shall include an annual report on CSR containing particulars specified in .

(2) In case of a foreign company, the balance sheet filed under sub-clause (b) of subsection (1) of section 381 shall contain an Annexure regarding report on CSR.

. To view the Annexure,Click Here

Office Order – Extension of one month for Steering Committee to submit its report w.e.f., 3.06.2018


Office Order on constitution of High Level Committee on Corporate Social Responsibility date 28.09.2018


Office Order- Constitution of Steering Committee


Re-constitution and Re-naming of Advisory Group of National Foundation for Corporate Social Responsibility [NFCSR] as “Governing Council, NFCSR”


Re-constitution of Steering Committee of National Foundation for Corporate Social Responsibility [NFCSR]


Reconstitution of High Level Committee on Corporate Social Responsibility dated 22.11.2018


Reconstitution of High Level Committee on Corporate Social Responsibility-2018 dated 11.10.2018


Commencement Notification dated 19.09.2018


Companies (Corporate Social Responsibility Policy) Amendment Rules, 2014 [GSR 644(E)] dated 12/09/2014


Companies (Corporate Social Responsibility Policy) Amendment Rules, 2015 [GSR 43(E)] dated 19/01/2015


Companies (Corporate Social Responsibility Policy) Amendment Rules, 2016 [GSR 540 (E)] dated 23/05/2016


Corrigenda to Schedule VII [GSR 261 (E)] dated 31/03/2014


Corrigendum amending Notification No. G.S.R. 776(E) dated 19.11.2019


Enforcement Notification S.O. 902(E) dated 26/03/2014


Exemption to Specified IFSC Private company [GSR 09(E)] dated 04/01/2017


Exemption to Specified IFSC Public company [GSR 08(E)] dated 04/01/2017


Further Amendment to Schedule VII [GSR 568 (E)]dated 06/08/2014


Further Amendments to Schedule VII [GSR 74 (E)] dated 24/10/2014


Notification amending Schedule VII of the Companies Act, 2013 dated 30.05.2019


Notification No. G.S.R. 776(E) amending Schedule VII of the Companies Act, 2013 dated 11.10.2019


Schedule VII [GSR 130 E] dated 27/02/2014


The Companies (Amendment) Act, 2017 (Effective from 03.01.2018)


The Companies (Amendment) Act, 2019 dated 31.07.2019


Circular on extension of tenure of High Level Committee on CSR dated 08.03.2019


Clarification with regard to provisions under section 135(5) of the Companies Act, 2013 dated 28.05.2018


General Circular 01/2015


General Circular 01/2016 Frequently Asked Questions (FAQs) with regard to Corporate Social Responsibility under Section 135 of Companies Act,2013


General Circular 05/2016


General Circular 21/2014


General Circular 36/2014


Companies Act – Schedule VII

Schedule VII

(See Section 135)

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to:—

(i) eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water;

(ii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;

(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water 48[including contribution to the Clean Ganga Fund setup by the Central Government for rejuvenation of river Ganga;

(v) protection of National Heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;

(vi) measure for the benefit of armed force veterans, war widows and their dependents;

(vii) training to promote rural sports, nationally recognized sports, Paralympic sports and Olympics sports;

(viii) contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Schedule Tribes, other backward classes, minorities and women;

Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE),  Defence Research and Development Organisation (DRDO), Department of Science and Technology (DST), Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs);

(ix) contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;

(x) rural development projects.

(xi) slum area development.

Explanation.- For the purposes of this item, the term ‘slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.

 disaster management, including relief, rehabilitation and reconstruction activities.

 

Substituted vide the Notification No. G.S.R. 776(E) dated 11.10.2019. To view the Notification. Click Here.
Amended vide the Corrigendum no. G.S.R. 859(E) dated 19.11.2019. To view the Corrigendum. Click Here.
Inserted vide the MCA notification dated 30.05.2019. To view the Notification, Click Here.

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