CSR in India

CSR in India

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On 29th August 2013, The Companies Act 2013 replaced the Companies Act of 1956. The New Act has made far-reaching changes affecting company formation, administration and governance, and incorporates an additional section i.e. Section 135 – which lays down certain requirements, expected of companies, pertaining to the execution, fund allotment and reporting on CSR.One of the Act’s most startling changes has been compulsory corporate social responsibility obligations (“CSR”) upon Indian companies and foreign companies listed in India. These obligations mainly come in the form of mandatory amounts companies must contribute to remediating social problems.

Ministry of Corporate Affairs notified Section135 and Schedule VII came into effect from 1st April 2014.
Entities Covered by the CSR Obligations – The Section 135 is applicable to companies

which have an annual turnover of Rs.1,000 crore or more
or a net worth of Rs.500 crore or more
or a net profit of Rs.5 crore or more.

Companies meeting the above criteria are required to constitute a CSR Committee consists of three directors and one director shall be an independent director. An unlisted public company or a private company covered under Section 135(1) of the Act, which is not required to appoint an independent director, shall have its CSR Committee without such director and a private company with two directors on Board should constitute its CSR Committee with only two directors.

The CSR Committee shall institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the company. The companies falling under the prescribed criteria are required to spend a minimum 2% of its average net profit for its preceding three financial years amount on CSR activities and report on the activities detailed in Schedule VII, or prepare to explain why they didn’t.

Suggested Areas of Activities for companies to implement their CSR in PROJECT MODE are :

(as per Schedule VII)

i. Eradicating hunger, poverty and malnutrition, promoting health care, sanitation & safe drinking water
ii. Promotion of education, special education and vocational skills
iii. Reducing inequalities faced by socially and economically backwards
iv. Ensuring Environmental sustainability through Promotion of flora & fauna, animal welfare agro-forestry etc.
v. Protection of national heritage, art & culture , Promotion &development of traditional arts and handicrafts
vi. Measures for benefit of armed forces veterans, war widows and their dependents
vii. Training to support Sports
viii. Contribution to PM’s fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women
ix. Contributions provided to technology incubators located within academic institutions which are provided by Central Government
x. Rural development projects
xi. Slum development
xii. As per subsequent notifications Swachh Bharat and Clean Ganga fund were also included as one of the CSR activities for CSR spend.


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FICCI Aditya Birla CSR Centre for Excellence
Federation House
Tansen Marg, New Delhi 110001
Tel: 011-23357243/ 23753118/ 23738760-70
Email: csrcfe@ficci.com
Follow us on Twitter @FICCICSR
Website: csrcfe.in , www.ficci.in/csr

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