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CSR AMENDMENTS
IN COMPANIES
CSR AMENDMENTS IN COMPANIES (AMENDMENT ACT),
2020 AND CSR POLICY (AMENDMENT RULES), 2021
The Ministry of Corporate Affairs (MCA) has (‘the Rules’) through the Companies (Corporate
amended the Companies (Corporate Social Social Responsibility Policy) Amendment Rules,
Responsibility Policy) Rules, 2014 through 2021 and have also notified provisions of Sub
notification dated January 22, 2021 and notified Section 5, 7 and 9 of Section 135 of Companies
the major changes in the Companies (Corporate Act 2013.
Social Responsibility) Rules, 2014
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INTRODUCTION OF NEW DEFINITIONS
3
MODES OF IMPLEMENTING CSR ACTIVITIES
4
CSR EXPENDITURE
S
FILING OF FORM CSR-1 EFFECTIVE FROM 01
APRIL, 2021
T
N
IMPACT ASSESSMENT
5
WHAT WILL NOT BE CONSIDERED AS “CSR”
E
T
DISCLOSURES ON WEBSITE
6
N
CARRYFORWARD OF EXCESS CSR
CONTRIBUTION (SECTION 135(5))
O
TRANSFER OF UNSPENT CSR AMOUNT
(SECTION 135 (5) and (6))
C
RELAXATION IN CONSTITUTION OF CSR
7
COMMITTEE
F
O
E
L
B
A
T
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INTRODUCTION OF NEW
DEFINITIONS
ADMINISTRATIVE OVERHEADS
With the notification of these amendments, the
penal provisions for non-compliance of CSR
It means the expenses incurred by the
Company for ‘general management and
provisions have come into force which changes
administration’ of Corporate Social
the very nature of the CSR provisions. Earlier the
Responsibility functions in the Company
provisions provide that non-spending of the CSR
but shall not include the expenses directly
amount was required only to be reported by the
incurred for the designing, implementation,
Company in the board’s report of the Company.
monitoring, and evaluation of a particular
Corporate Social Responsibility project or
programme.
Further, the amendment in the Rules are not just
limited to the changes made in the CSR
CSR POLICY
provisions, rather, it extends to make substantial
It means a statement containing the
changes in the implementation of the entire CSR
approach and direction given by the board
activity. Infact, couple of fresh concepts have also
of a Company, taking into account the
been introduced in the Rules like registering of
recommendations of its CSR Committee,
implementing agencies by filing e-form CSR-1
and includes guiding principles for
with the MCA, CFO certificate, mandatory impact
selection, implementation and monitoring
of activities as well as formulation of the
assessment.
annual action plan.
The following amendments have been made
through the Companies (Corporate Social
INTERNATIONAL ORGANIZATION
Responsibility Policy) Amendment Rules, 2021:
It means an organization notified by the
Central Government as an international
organization under section 3 of the United
Nations (Privileges and Immunities) Act,
1947 (46 of 1947), to which the provisions
of the Schedule to the said Act apply.
ONGOING PROJECT
It means a multi-year project undertaken by
a Company in fulfilment of its CSR obligation
having timelines not exceeding three years
excluding the financial year in which it was
commenced, and shall include such project
that was initially not approved as a multi-
year project but whose duration has been
extended beyond one year by the board
based on reasonable justification.
PUBLIC AUTHORITY
It means ‘Public Authority’ as defined in
clause (h) of section 2 of the Right to
Information Act, 2005.
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3
MODES OF IMPLEMENTING CSR EXPENDITURE
CSR ACTIVITIES
The Board shall ensure that the CSR activities are
The administrative overhead ≤ 5% of total CSR
1.
undertaken by the Company itself or through –
expenditure of the Company for the financial year
is permitted.
a Company established under section 8 of
the Companies Act, 2013, or a registered
2.
The surplus out of CSR activity was anyway
public trust or a registered society,
prohibited to form part of business profits of the
registered under section 12A and 80 G of
Company and shall be ploughed back into the
the Income Tax Act, 1961 (43 of 1961),
same project or shall be transferred to the
established by the Company, either singly or
Unspent CSR Account and spent in pursuance of
along with any other Company, or
CSR policy, within a period of six months of the
expiry of the financial year.
a Company established under section 8 of
the Companies Act, 2013, or a registered
Where a Company spends an amount in excess
3.
trust or a registered society, established by
of requirement, such excess amount may be set
the Central Government or State
off against the CSR spending requirement up to
Government; or
immediate succeeding three financial years
any entity established under an Act of
subject to the conditions that –
Parliament or a State legislature; or
i. the excess amount available for set off
a Company established under section 8 of
shall not include the surplus arising out of
the Act, or a registered public trust or a
the CSR activities,
registered society, registered under section
ii. the Board of the Company shall pass a
12A and 80G of the Income Tax Act, 1961,
resolution to that effect.
and having an established track record of
4.The CSR amount may be spent by a Company for
atleast three years in undertaking similar
creation or acquisition of a capital asset, which
activities.
shall be held by -
FILING OF FORM CSR-1 EFFECTIVE
a Company established under section 8
FROM 01 APRIL, 2021
of the Act, or a Registered Public Trust or
Registered Society, having charitable
objects and CSR Registration Number
Every entity who intends to undertake any CSR
under sub-rule (2) of rule 4; or
activity, shall register itself with the Central
Government by filing the form CSR-1 electronically
beneficiaries of the said CSR project, in
with the Registrar.
the form of self-help groups, collectives,
entities; or
a public authority:
On the submission of the Form CSR-1 on the portal, a
For existing capital assets -this has to be
unique CSR Registration Number shall be generated
complied within 180 days i.e. by 21st
by the system automatically.
July, 2021 or additional period of 90 days
with the approval of Board.
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