CSR Section 135 Companies explained: this guide covers what CSR Section 135 Companies means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Corporate Social Responsibility (CSR) is mandatory for qualifying companies under Section 135 of the Companies Act 2013. India was one of the first countries to make CSR legally mandatory, requiring eligible companies to spend at least 2% of average net profits of the preceding three financial years on CSR activities.
Which Companies Must Comply with CSR?
Any company (including foreign company branch/project) that meets any one of the following in the immediately preceding financial year:
- Net Worth ≥ Rs. 500 crore, OR
- Turnover ≥ Rs. 1,000 crore, OR
- Net Profit ≥ Rs. 5 crore
If a company qualifies in one year, it must comply in the next financial year, even if it falls below the threshold in the next year.
CSR Spend Requirement
- Minimum 2% of average net profit of the preceding 3 financial years
- Net profit = profit computed per Companies Act (not ITA) — before tax
- Dividends from domestic subsidiaries are excluded from net profit
- If prescribed CSR amount < Rs. 50 lakh, the company need not constitute a CSR Committee (board directly handles CSR)
CSR Committee
- Mandatory for companies with CSR obligation > Rs. 50 lakh
- At least 3 directors, including 1 independent director (listed/public companies)
- For unlisted private companies: 2 directors (independent director not mandatory)
Schedule VII — Eligible CSR Activities
- Eradicating hunger, poverty, malnutrition
- Promoting healthcare, sanitation, safe drinking water
- Education, vocational skills, livelihoods
- Gender equality, women empowerment
- Environmental sustainability, ecological conservation
- National Heritage protection, art and culture
- Armed forces veterans, war widows
- Rural development projects
- Swachh Bharat Kosh, Clean Ganga Fund
- PM CARES Fund
What is NOT Eligible as CSR?
- Activities that benefit only employees and their families
- Political contributions
- Sponsorships for marketing/brand promotion
- Contributions to set-up CSR infrastructure costs claimed as CSR expense
Unspent CSR Amount
If CSR spend is less than prescribed 2%:
- Ongoing projects: Unspent amount transferred to Unspent CSR Account within 30 days; must be spent within 3 years
- Other projects: Unspent amount transferred to PM Relief Fund / Schedule VII fund within 6 months of financial year end
