Section 135 of the Companies Act 2013 makes Corporate Social Responsibility (CSR) mandatory for qualifying companies. This guide covers everything from applicability to compliance reporting.
Who Must Comply with Section 135?
Any company that meets ANY of these thresholds in the preceding financial year:
- Net worth of INR 500 crore or more
- Turnover of INR 1,000 crore or more
- Net profit of INR 5 crore or more
The 2% Rule
Qualifying companies must spend at least 2% of their average net profits of the preceding three financial years on CSR activities listed in Schedule VII of the Companies Act.
Eligible CSR Activities (Schedule VII)
- Eradicating hunger, poverty, and malnutrition
- Promoting education, gender equality, and women empowerment
- Healthcare including preventive healthcare and sanitation
- Environmental sustainability and ecological balance
- Protection of national heritage, art, and culture
- Benefits to armed forces veterans
- Promoting sports
- PM National Relief Fund and other government funds
- Rural development projects
- Slum area development
- Disaster management and relief
- Technology incubators in academic institutions
CSR Committee Requirements
Companies must constitute a CSR Committee of the Board with at least 3 directors, including at least 1 independent director. The committee formulates and monitors the CSR policy.
Manage your CSR programme with our CSR Programme Manager tool.