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The concept of CSR (Corporate Social Responsibility) was introduced under the Companies Act, 2013 with the enforcement of Section 135 under the Act. Companies have certain responsibilities towards the stakeholders including the society in which it operates. Thus companies that cross the prescribed threshold are required to spend, in every financial year, at least 2%. of the average net profits of the company made during the three immediately preceding financial years.

With a view to improve the CSR environment and the functioning of NGOs operating in India & rendering CSR support services to the companies, the MCA (Ministry of Corporate Affairs) vide its notifications dated 22nd January 2021, had introduced substantial amendments to the CSR provisions under the Companies Act, 2013.

The key changes inter-alia includes introduction of the concept of ongoing projects, mandatory impact assessment for bigger projects, CFO certification, enhanced disclosures, treatment of unspent CSR amount, revised criteria for implementing agencies, etc. Pursuant to the amendments, the companies are now subject to heavy penalties for non-compliance w.r.t treatment of unspent CSR amount.

Under the new norms, also major changes have been introduced with respect to the NGOs who implement the CSR projects as the PIAs (Project Implementation Agencies), on behalf of the companies. Key changes w.r.t the NGOs are presented below:

1) A Company is permitted to undertake the CSR activities either itself or through:

(a) a section 8 company, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961, established by the company, either singly or along with any other company, or

NGOs mandated to have CSR Registration Number, 80G and 12A Registration to undertake CSR activities

(b) a section 8 company or a registered trust or a registered society, established by the Central Government or State Government; or

(c) any entity established under an Act of Parliament or a State legislature; or

(d) a section 8 company ,or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.

Therefore as indicated above, the NGOs falling under category (a) or (d), are required to have 12A and 80G registration(s) under the Income Tax Act, 1961, in order to carry out the CSR activities.

Besides these changes by the MCA, the government had earlier also asked the NGOs to re-validate their existing 80 G and 12 A registrations with the IT department under the Income Tax Act, 1961.

2) With a view to further strengthen the CSR environment, the NGOs, who intends to undertake CSR activities are now required to obtain mandatory CSR Registration Number (CRN) by filling form CSR -1 with the Ministry of Corporate Affairs w.e.f 01, April, 2021. The CSR -1 form is an online application which should be filled by the NGOs, if they intend to do any CSR activity. On registration, a unique CSR Registration Number will be allotted to the applicant(s).


Conclusion - This is a very bright step to improve the CSR environment by putting responsibilities on the companies as well as the NGOs. The NGOs are required to obtain a CSR Registration Number, 80G and 12A registration to undertake the CSR activities. On the other hand, the companies are also expected to ensure compliance with these norms while sanctioning and implementing their CSR activities.

The author can also be reached at pcshga@gmail.com


Disclaimer: Absolute care is taken to prepare this article, however the Author will not be responsible for inadvertent errors, if any. The content published is only for educational purpose and shall not be construed as rendering of any professional advice, in any manner, whatsoever.

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Category Corporate Law, Other Articles by - Himanshu Goyal