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Recent amendments to the CSR provisions

Pooja Mundhra 
Updated on 07 February 2021


Numerous amendments have taken place in the Corporate Social Responsibility ('CSR') provisions since it is incorporated under the Companies Act, 2013 ('Act'). The Act further welcomes the recent amendments in the CSR provisions vide Companies Amendment Act, 2019, Companies Amendment Act, 2020 and Companies (CSR Policy) Amendment Rules, 2021 which are made applicable with effect from 22nd January 2021.


1. Quantum of CSR

Companies are required to spend at least two percent (2%) of its average net profits made during immediately three preceding financial year or where the Company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years.'

Recent amendments to the CSR provisions

2. Treatment of Unspent Amount

a. Relating to the ongoing project: Any unspent amount should be transferred to a special account to be opened in any scheduled bank called as 'Unspent Corporate Social Responsibility Account (UCSRA)'.

For instance, any amount unspent from the ongoing project during the Financial Year 2020-21 is required to be transferred to a special account on or before 30th April 2021.

b. Not relating to the ongoing project: Any unspent amount should be transferred to the Fund specified in Schedule-VII within a period of Six (6) months from the expiry of that financial year.

For instance, any amount unspent during the Financial Year 2020-21 is required to be transferred to the fund on or before 30th September 2021.

c. Time period for spending the unspent amount of ongoing project: The unspent amount shall be spent within a period of three (3) financial years from the date of transfer to UCSRA, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty (30) days from the date of completion of the third financial year.

For instance, any amount transferred to the UCSRA account remained unspent for the financial year 2020-21 can be utilized for the project up to the financial year 2023-24, else it is required to be transferred to a fund specified in Schedule VII. Hence, any project period should not exceed more than 3 years.


d. Consequences of non-transfer of Unspent CSR amount :

  • The Company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less; and
  • Every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to be transferred or two lakh rupees, whichever is less.

3. Set-off of excess amount spent towards CSR

The Company can Set-off the excess amount spent towards CSR up to immediate three (3) succeeding financial years provided that amount shall not include the surplus amount arising from the CSR activities and Board has passed the resolution to that effect.

4. CSR Committee

CSR Committee is not required to be constituted if the amount spent by the Company does not exceed fifty lakhs, board shall discharge the duties.



1. New definition

The following new definition were added:

  1. Administrative Overheads;
  2. International Organization;
  3. Ongoing Project; and
  4. Public Authority

2. Meaning of Corporate Social Responsibility(CSR)

The activities undertaken by a Company in pursuance of its statutory obligation laid down in Section 135 of the Act and shall not include the following:

  1. Activities undertaken in pursuance of normal course of business of the company (except COVID-19 vaccine, drugs and medical device related R & D up to the financial year 2022-23, subject to certain conditions);
  2. Any activity undertaken by the company outside India (except for training of Indian sports personnel representing any State or Union territory at national level or India at international level);
  3. Contribution of any amount directly or indirectly to any political party under section 182 of the Act;
  4. Activities that significantly benefit the employees of the company as defined in clause (k) of section 2 of the Code on Wages, 2019;
  5. Activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services; and
  6. Activities carried out for fulfillment of any other statutory obligations under any law in force in India

3. CSR Policy

CSR Policy shall include:

  • Approach and direction given by the board of the company (including recommendations of its CSR Committee)
  • Guiding principles for selection, implementation and monitoring of activities; and
  • Formulation of the annual action plan.

4. Obligations of implementing agencies

Companies can do CSR either on its own or through implementing agencies and are required to adhere to the following:

  1. Registration of such entity is made mandatory by filing the e-Form CSR-1 with the Registrar with effect from 1st April 2021 (shall not affect the CSR projects or programmes approved prior to the 01st April 2021).
  2. Up on submission of the e-Form CSR-1, a Unique CSR Registration Number shall be generated by the system automatically.
  3. Company may engage international organizations for designing, monitoring and evaluation of the CSR projects or programmes as per its CSR policy.

5. Responsibility of the Board and Chief Financial Officer (CFO)

  1. Monitor and ensure that the CSR funds are utilized for the specified purposes and in the manner as approved.
  2. CFO or the person responsible for financial management shall certify to that effect.
  3. In case of ongoing project, Board shall monitor the implementation of the project and shall be competent to make modifications, if any, for smooth implementation of the project within the overall permissible time period.

6. Annual Action Plan

CSR Committee shall formulate and recommend to the Board, an annual action plan pursuant to the CSR policy which includes the following:

  1. List of CSR Projects or Programme approved;
  2. Manner of execution;
  3. Modalities of utilization of funds and implementation schedules;
  4. Monitoring and reporting mechanism;
  5. Details of need and impact assessment, if any; and
  6. Board may alter the Annual Action Plan based on the recommendation of CSR Committee

7. Reporting of CSR

  • Indian Company: The Company shall annex with its Board Report an Annual Report on CSR in format of Annexure I (for F.Y. 2020-21) or in Annexure II (w.e.f. F.Y. 2021-22).
  • Foreign Company: The Company's whose Balance sheet is required to be filed u/s 381 shall contain an Annual Report on CSR in the format of Annexure I (for F.Y. 2020-21) or in Annexure II (w.e.f. F.Y. 2021-22).

8. Surplus arising out of CSR activities

  1. Any surplus arising out of the CSR activities shall not form part of the business profit;
  2. Such surplus shall be ploughed back into the same project or shall be transferred to the Unspent CSR Account; and
  3. Surplus should be spent in pursuance of CSR policy / Annual action plan of the company or transfer such surplus amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year.

9. Creation or acquisition of Capital Assets from CSR amount:

  1. The CSR Assets to be held by a Section 8 Company, Registered Public Trust, or Registered Society with charitable objects , having CSR Registration Number or beneficiaries of the said CSR project, in the form of self-­help groups, collectives, entities or a public authority.
  2. Any CSR asset created prior to these rules, required to comply within a period of 180 days (Board may further extend time period by 90 days).

10. Impact Assessment

  1. Every company having average CSR obligation of ten crore rupees or more in the immediately three preceding financial years is required to undertake the impact assessment:
  1. through an independent agency ;
  2. of their CSR projects having outlays of one crore rupees or more and which have been completed not less than one year before undertaking the impact study.
  1. The impact assessment reports shall be annexed to the Annual Report on CSR.
  2. Impact assessment expenditure can be booked as CSR expenses. However, it shall not exceed five percent of the total CSR expenditure for that financial year or fifty lakh rupees, whichever is less. '

11. Website disclosure

The Company shall mandatorily disclose the composition of the CSR Committee, CSR Policy and Projects approved by the Board on their website, if any.

12. National Unspent CSR Fund

Central Government shall establish a 'National Unspent CSR Fund' for purpose of transferring the unspent CSR amount of companies, which shall be then used for activities outlined in Schedule VII.

Until such fund is created the unspent CSR amount can be transferred to any fund as specified in schedule VII of the Act.

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Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore, users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a piece of professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

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