CSR Overview — Corporate Social Responsibility | Savlana Init

CSR · Overview

CSR Overview — Corporate Social Responsibility Compliance Under Section 135.

Section 135 of the Companies Act mandates CSR spending, committee formation, policy drafting, CSR-1 registration for implementing agencies, and annual CSR-2 filing. We manage your full CSR compliance cycle — from applicability to annual return.

Section 135 of the Companies Act, 2013 mandates Corporate Social Responsibility (CSR) spending for companies that meet prescribed financial thresholds — a net worth of ₹500 crore or more, or a turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more during the immediately preceding financial year. Such companies must constitute a CSR Committee of the board (with at least three directors, including one independent director), formulate a CSR Policy, and spend at least 2% of the average net profits of the preceding three financial years on Schedule VII activities each year.

The CSR framework underwent significant changes in 2021 — unspent CSR amounts can no longer simply be carried forward. If the unspent amount relates to an ongoing project, it must be transferred to a special Unspent CSR Account within 30 days of the financial year end, and spent within 3 years. If it does not relate to an ongoing project, it must be transferred to one of the funds specified in Schedule VII within 6 months of the financial year end. Companies that implement CSR activities through third-party agencies must ensure those agencies are registered on MCA (Form CSR-1) to obtain a CSR Registration Number.

Annual CSR disclosures are mandatory in the Board's Report and, separately, through Form CSR-2 filed on MCA after 31 March. We handle the full CSR compliance cycle — applicability assessment, CSR Committee formation, Policy drafting, implementing agency CSR-1 registration, budget computation, unspent CSR transfers, CSR-2 filing, and Board Report CSR disclosures.

Our CSR Services

CSR Applicability Assessment

Reviewing net worth, turnover, and net profit to confirm whether the company crosses the Section 135 CSR threshold.

CSR Committee Formation

Constituting the Board's CSR Committee with the required composition (minimum 3 directors, 1 independent director).

CSR Policy Drafting

Drafting a compliant CSR Policy identifying focus areas from Schedule VII and the implementation approach.

CSR Budget Computation

Computing the mandatory 2% CSR spend from the average net profit of the three preceding financial years.

CSR-1 Registration

Registering implementing agencies on MCA via Form CSR-1 to obtain a CSR Registration Number (CRN).

CSR-2 Annual Return Filing

Filing Form CSR-2 with MCA to report CSR activities, expenditure, and unspent amounts for the financial year.

Unspent CSR Amount Compliance

Managing transfers of unspent CSR amounts to the Unspent CSR Account or Schedule VII fund within statutory timelines.

Board Report CSR Disclosure

Preparing the mandatory CSR disclosure annexure for the Board's Report as required under Section 135 and CSR Rules.

Our Process

Applicability Review

We compute net worth, turnover, and net profit to confirm CSR applicability and calculate the mandatory spending amount.

Committee & Policy Setup

CSR Committee constituted at board level; CSR Policy drafted identifying Schedule VII focus areas and implementation approach.

CSR Activity Planning

CSR projects identified with implementing agencies; CSR-1 registration obtained for agency partners.

Expenditure Monitoring & Transfer

CSR expenditure tracked during the year; unspent amounts transferred to Unspent CSR Account or Schedule VII fund.

CSR-2 Filing & Board Report

Form CSR-2 filed on MCA after year-end; Board Report CSR annexure prepared with all required disclosures.

Why It Matters

✓CSR applicability correctly determined based on all three financial thresholds

✓CSR Committee constituted with the required director composition from day one

✓CSR Policy drafted covering at least one Schedule VII activity with clear implementation approach

✓2% CSR spend computed correctly from average net profit of three preceding years

✓Implementing agency CSR-1 registration obtained before funds are disbursed

✓Unspent CSR amounts transferred within statutory timelines to the correct fund

✓CSR-2 annual return filed on MCA within the prescribed deadline

✓Board Report CSR annexure prepared with full statutory disclosures

Frequently Asked Questions

Companies with a net worth of ₹500 crore or more, OR a 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 constitute a CSR Committee and spend at least 2% of average net profits on CSR activities.

Schedule VII lists qualifying CSR activities including: eradicating poverty, hunger, and malnutrition; promoting education and healthcare; environmental sustainability; rural development; skill development; gender equality; promotion of sports; and contributions to technology incubators. Companies can also contribute to specified national funds.

Unspent CSR relating to ongoing projects must be transferred to an Unspent CSR Account within 30 days of the financial year end and spent within 3 years. Unspent amounts not related to ongoing projects must be transferred to a Schedule VII fund (PM National Relief Fund, etc.) within 6 months of year-end.

CSR applicability is based on the immediately preceding financial year's figures. If a company qualifies in one year but makes losses in the current year, it still needs to constitute the Committee and formulate the Policy, but its mandatory spend may be nil if average net profits are nil or negative.

Yes — companies can implement CSR through registered trusts, societies, Section 8 companies, or other implementing agencies. However, such agencies must be registered on MCA (Form CSR-1) to obtain a CSR Registration Number before receiving CSR funds.

CSR-2 is the annual report of CSR activities filed by applicable companies on MCA. It reports the CSR committee composition, amounts spent, activities undertaken, and unspent amounts. CSR-2 is filed separately from AOC-4 and is due after the financial year end on a date notified by MCA.

Need end-to-end CSR compliance managed?

We'll assess applicability, set up the committee and policy, register implementing agencies, manage unspent transfers, and file CSR-2 and Board Report disclosures.