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Query: Whether the expenses incurred by a company through a registered trust on school are eligible for Corporate Social Responsibility ("CSR") under the Companies Act, 2013?

Reply: Brief and relevant Background of Law:


Section 135 of Companies CA, 2013;

  1. Every company having net worth of
  • rupees five hundred crore or more, or
  • turnover of rupees one thousand crore or more or
  • a net profit of rupees five crore or more,

during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

Provided that 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.

  1. The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.
  1. The Corporate Social Responsibility Committee shall,—
  1. formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company in areas or subject, specified in Schedule VII;
  2. recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
  3. monitor the Corporate Social Responsibility Policy of the company from time to time.
  1. The Board of every company referred to in sub-section (1) shall,—
  1. 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 as may be prescribed; and
  2. ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company.
  1. The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two percent. 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 local area and areas 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.

Eligibility of CSR expenditure through a registered trust on school


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

  1. 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.
  2. Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.
  3. 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.
  4. 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 including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga.
  5. 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 art and handicrafts;
  6. Measures for the benefit of armed forces veterans, war widows and their dependents;
  7. Training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports
  8. Contribution to the prime minister's national relief fund or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women;
  9. 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 Biotechnology (DBT), 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).
  10. Rural development projects
  11. Slum area development.

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.

Clarification by CSR Cell, MCA:

General Circular No. 21/2014 of MCA dated June 18, 2014 clarifies that Contribution to Corpus of a Trust/ Society/ Section 8 companies etc. will qualify as CSR expenditure as long as :

  1. the Trust/ Society/ Section 8 company etc. is created exclusively for undertaking CSR activities, or
  2. where the corpus is created exclusively for a purpose directly relatable to a subject covered in Schedule VII of the Act.


CSR is intended for spending on welfare areas for which the government claims to lack funds and requires assistance. Yes, Corporate can claim Contribution given to a School though any trust and/or Corpus of a trust for the purpose of promoting education. Herein, the Board need to be satisfied that the disbursed CSR funds are being utilized only for the purposes of implementation of CSR activities which ware approved by the Board and additionally, the chief financial officer, if any or a person responsible for the financial management of a company is required to certify to that effect. Additionally, the Corporate may request the trust to maintain a separate Bank Account for monitoring the Contribution received by the Company and all expenses made through it, towards the approved purpose.


1. Companies Act, 2013
2. FAQs issued by MCA

Disclaimer: The information is provided purely for informational and educational purposes only and based on my understanding/knowledge. This does not constitute any legal advice or legal opinions. Therefore, I cannot take any responsibility for the result or consequences of any attempt to use or adapt any of the information presented in this article.


Published by

CS Binit Thakur
(company secretary)
Category Corporate Law   Report

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