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Authored by Adit Bhuva & Sri Vidhya Kumar

Ministry of Corporate Affairs has introduced numerous changes to Corporate Social Responsibility (CSR) and the said changes were notified on 22nd January 2021 (“Amendments”). In this regard there are certain actions which may be required to be undertaken by the Companies to whom CSR is applicable.

In this article, we have highlighted specific actions which the companies may have to take.

S.No Highlights Board / Committee ActionPoints
1 Applicability of constitution of CSR Committee
CSR committee has been made optional for companies which have a liability of Rs. 50 lacs or less towards CSR.

For such Companies, the functions of CSR committee can be discharged by the Board.

If the liability towards CSR is less than Rs. 50 Lacs, then CSR committee may be dissolved at the option the Board.
2 Mandates in the CSR Policy
CSR Policy should contain:

  • The approach and direction of the Company towards CSR (areas of schedule VII of Companies Act 2013 (Act) which the Company will be concentrating on);
  • The guiding principles for selection, implementation, and monitoring of CSR activities.
  • Requirement of formulating an Annual action plan.
CSR Policy to be amended to include the mandates (recommendation of CSR Committee required, if applicable)
3 Approving of Annual Action Plan
Company has to frame an Annual Action Plan consisting of the following details:

  • (a) the list of CSR projects or programs that are approved to be undertaken in areas or subjects specified in Schedule VII of the Act;
  • (b) the manner of execution of such projects or programs
  • (c) the modalities of utilisation of funds and implementation schedules for the projects or programs;
  • (d) monitoring and reporting mechanism for the projects or programs; and
  • (e) details of need and impact assessment, if any, for the projects undertaken by the company:

Provided that Board may alter such plan at any time during the financial year, as per the recommendation of its CSR Committee, based on the reasonable justification to that effect.

Based on the recommendation of the CSR Committee (if applicable), the Annual Action Plan to be approved by the Board.
4 Monitoring of implementation of CSR project
Board is required to monitor implementation of a project with reference to approved timelines and can make modifications within permissible time period. Implementation schedule of a project to be approved by the Board. Update on implementation to be placed before the board
5 Contribution of CSR through implementing agency – agency to be registered with MCA for CSR
If CSR activity is undertaken through following entities, then any amount provided to such entities will be considered as spend towards CSR, only if, the entity is registered with MCA for carrying out CSR activities:

1. A company established under section 8 of Companies Act, 2013, a registered public trust or a registered society(*) formed

  • by the Company either singly or alongwith any other company.
  • Established by the Central Government or state government

2. If not formed by the Company or Central government of state government, then the aforesaid entities to have 3 years of track record in undertaking similar programs or projects.

3. Any entity established under as Act of parliament or a state legislature

*section 8 of Companies Act, 2013, a registered public trust or a registered society will have to be registered under section 12A & 80G of Income Tax Act, 1961

Proof of registration with MCA to be obtained before spending of CSR amount
6 Treatment of unspent CSR amount as on 31st
(a) Any amount required to be spent towards CSR and remaining unspent (and not relating to an ongoing project) as on 31st March is required to be transferred to a fund specified in Schedule VII of the Act within 6 months from 31st March of that year.

(b) If the unspent amount pertains to an ongoing project, then such amount to be transferred to a special account called “Unspent CSR Account”
within 30 days of 31st March.

  • This amount is required to be spent on the “ongoing project” within 3 financial years from the date of transfer.
  • If the amount is unspent after three financial years, then such amount to be
    transferred to the fund specified in Schedule VII of the Act within 30 days
    from the end of the 3 rd financial year.
To ascertain if any amount is unspent as on 31st March and transfer such unspent amount to the accounts specified.
7 Benefit of set off w.r.t. excess amount spent towards CSR
Excess amount spent towards CSR in a particular financial year, is allowed to be offset upto a period of three subsequent years, subject to approval of the Board. Board to take note of the unspent amount to offset in subsequent years.
8 Requirement of conducting impact assessment
Requirement of undertaking impact assessment through an independent agency, of their CSR projects.


  • Companies having average CSR obligation of Rs. 10 Crore or more in the three immediately preceding financial years The impact assessment has to be done only for the CSR Projects which has completed one year and having an outlay of Rs 1 Crores or more.
The impact assessment
reports are to be placed
before the Board and
ensure that it forms part of director’s report.
9 Certification to the Board of directors
Certification from Finance Dept: – Board, in order to satisfy itself that the funds are utilised for the purpose for which it was disbursed for, should obtain certificate from the Chief Financial Officer of the company or person responsible for financial management indicating that the funds are utilised for the purpose for which it was disbursed for. Board to take note of the certificate
10 Disclosures in Boards report
Additional detailed disclosures are required to be made in the Board’s report for the financial year 31st March 2022 onwards. Applicable for the Board’s report for the FY 31st March 2022 onwards
11 Disclosures in website
The following information to be disclosed on the website:

  • Composition of the CSR Committee, if any,
  • CSR Policy &
  • CSR Projects

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