What is Corporate Social Responsibility (CSR) in India?

Corporate Social Responsibility (CSR) is a regulatory mechanism in India under the Companies Act, 2013, that requires qualifying companies to undertake projects, programs, or activities that promote social welfare and environmental sustainability.

Which companies are required to comply with CSR provisions?

Companies with a net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more during the immediately preceding financial year are required to comply with CSR provisions.

How much is a company required to spend on CSR activities?

Qualifying companies are required to spend at least 2% of their average net profits made during the three immediately preceding financial years on approved CSR activities.

What happens if a company fails to spend the required CSR amount?

If a company fails to spend the required amount, it must transfer the unspent amount to a fund specified in Schedule VII within six months, unless the unspent amount relates to an ongoing project, in which case it must be transferred to a special Unspent CSR Account.

Who should be part of the CSR Committee in a public company?

Every public company covered by CSR must establish a CSR Committee of the Board consisting of three or more directors, out of which at least one must be an independent director.

What is the composition of the CSR Committee for a private company?

If a private company is not required to appoint an independent director, its CSR Committee can have two or more directors on the board.

What are the key responsibilities of the CSR Committee?

The CSR Committee is responsible for formulating and recommending a CSR Policy, recommending the amount to be spent, and creating a transparent monitoring mechanism for the execution of CSR projects.

What is the role of the Board of Directors regarding CSR?

The Board of Directors is responsible for approving the CSR policy, ensuring the mandatory 2% expenditure on approved activities, and disclosing the details and committee composition in the annual board report.

Can CSR funds be spent on activities outside India?

No, CSR expenditure is strictly restricted to projects, programs, and activities that are carried out within India.

Are contributions to political parties considered CSR?

No, any direct or indirect contribution to any political party under section 182 of the Companies Act is not considered a valid CSR activity.

Does CSR apply to foreign companies operating in India?

Yes, foreign companies with a branch or project office in India are also required to comply with CSR provisions if they meet the specified financial thresholds.

What activities qualify as CSR under the Companies Act?

Activities qualifying as CSR are listed in Schedule VII of the Companies Act. They include education, preventive healthcare, poverty eradication, environmental sustainability, disaster management, and rural development projects.

What is an Annual Action Plan for CSR?

An Annual Action Plan is created by the CSR Committee and details the list of approved CSR projects, their execution mechanisms, budgets, timelines, and monitoring/reporting procedures for the financial year.

Can a company execute CSR through an NGO or Trust?

Yes, a company can undertake CSR activities through a registered Section 8 company, registered public trust, or registered society, provided the agency has a mandatory CSR-1 registration with the MCA.

Form CSR-1 is a mandatory e-form filed on the MCA portal for the registration of entities (like NGOs and trusts) that intend to undertake CSR activities on behalf of a company.

Are activities benefiting only the company's employees considered CSR?

No, CSR activities that exclusively benefit the employees of the company and their families do not qualify as valid CSR expenditure under the law.

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Corporate Social Responsibility (CSR) is a crucial aspect of doing business in India. Under the Companies Act, qualifying companies must spend at least 2% of their average net profit on CSR activities such as poverty eradication, education, gender equality, and environmental sustainability.

By engaging in strategic CSR, businesses not only comply with statutory requirements but also improve brand recognition, boost customer loyalty, and contribute meaningfully to national development.

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Streamline your CSR initiatives with Proper Committees & Policies

Companies covered by CSR mandates must establish a dedicated CSR Committee to formulate, recommend, and monitor the CSR Policy. The Board of Directors plays a pivotal role in approving the policy, ensuring targeted expenditure, and making appropriate disclosures in the annual board report.

We help you set up transparent monitoring systems, draft effective annual action plans, and ensure your CSR expenditures are channeled into approved activities like rural development, healthcare, and education support.

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Risk of non-compliance and heavy penalties
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Comprehensive Guide to Corporate Social Responsibility AY 2026-27, explained

Corporate Social Responsibility (CSR) is a component of doing business that is growing more and more important in India. India offers a special environment for companies to participate in CSR projects that boost social welfare while also generating profit for their stakeholders. The concept is regulated by the Companies Act, 2013, mandating qualifying companies to spend a specific portion of their profits on societal betterment.

Every company meeting the threshold criteria must establish a CSR Committee consisting of three or more directors (or as prescribed for private/foreign companies). This committee formulates the CSR Policy, recommends the budget, and oversees the execution of projects ranging from healthcare and education to environmental sustainability and disaster management.

The Board of Directors is responsible for approving the CSR policy, ensuring the statutory 2% expenditure on approved activities, and disclosing the details in the annual board report. Furthermore, new regulations mandate detailed annual action plans covering the list of initiatives, execution methods, budgets, timelines, and impact assessment mechanisms, making compliance more rigorous than ever.

Documents you will need

Company PAN, COI, MOA, and AOA
Financial statements of the last 3 financial years
Details of the Board of Directors
Draft of the proposed CSR Policy
Details of implementing agencies (if any)
CSR-1 Registration details of partner NGOs

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Comprehensive Guide to Corporate Social Responsibility why it pays to use an expert

Corporate Social Responsibility (CSR) is a component of doing business that is growing more and more important in India. India offers a special environment for companies to participate in CSR projects that boost social welfare while also generating profit for their stakeholders. The concept is regulated by the Companies Act, 2013, mandating qualifying companies to spend a specific portion of their profits on societal betterment.

Every company meeting the threshold criteria must establish a CSR Committee consisting of three or more directors (or as prescribed for private/foreign companies). This committee formulates the CSR Policy, recommends the budget, and oversees the execution of projects ranging from healthcare and education to environmental sustainability and disaster management.

The Board of Directors is responsible for approving the CSR policy, ensuring the statutory 2% expenditure on approved activities, and disclosing the details in the annual board report. Furthermore, new regulations mandate detailed annual action plans covering the list of initiatives, execution methods, budgets, timelines, and impact assessment mechanisms, making compliance more rigorous than ever.

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Enhance your corporate image and societal impact through Strategic CSR

Streamline your CSR initiatives with Proper Committees & Policies

Matched to AIS, before the department checks

With standard services vs With our expert team

How it works

Share your documents

Talk to your expert

Approve the summary

We file & you relax

Comprehensive Guide to Corporate Social Responsibility AY 2026-27, explained

Documents you will need

Why choose us for this service

Improved Brand Recognition

Customer Loyalty

Regulatory Compliance

Structured Execution

Societal Impact

Notice shield

Year-round access

CSR Compliance & Advisory honest pricing

Salaried

Multi-income

Pro

Comprehensive Guide to Corporate Social Responsibility why it pays to use an expert

Frequently Asked Questions

What is Corporate Social Responsibility (CSR) in India?

Which companies are required to comply with CSR provisions?

How much is a company required to spend on CSR activities?

What happens if a company fails to spend the required CSR amount?

Who should be part of the CSR Committee in a public company?

What is the composition of the CSR Committee for a private company?

What are the key responsibilities of the CSR Committee?

What is the role of the Board of Directors regarding CSR?

Can CSR funds be spent on activities outside India?

Are contributions to political parties considered CSR?

Does CSR apply to foreign companies operating in India?

What activities qualify as CSR under the Companies Act?

What is an Annual Action Plan for CSR?

Can a company execute CSR through an NGO or Trust?

What is Form CSR-1?

Are activities benefiting only the company's employees considered CSR?

File with an expert, sleep easy.

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