Everything you need to know about CSRBOX and how we work
A. CSR Applicability and Legal Framework
CSR in India is governed mainly by Section 135 of the Companies Act, 2013, Schedule VII of the Act, and the Companies (Corporate Social Responsibility Policy) Rules, 2014, along with amendments, notifications and MCA clarifications issued from time to time.
A company is covered under CSR if, during the immediately preceding financial year, it has any one of the following: net worth of INR 500 crore or more, turnover of INR 1,000 crore or more, or net profit of INR 5 crore or more.
No. CSR applies to every company meeting the prescribed financial thresholds, whether listed, unlisted, private, public, Section 8, holding, subsidiary, or foreign company having a branch or project office in India, subject to the applicable provisions.
Yes. MCA has clarified that Section 135 begins with 'every company', and therefore Section 8 companies are also covered if they meet the CSR applicability thresholds.
Yes. Even if a company has not completed three financial years, CSR provisions can apply if it meets the prescribed net worth, turnover, or net profit criteria. In such cases, CSR obligation is computed based on the immediately preceding financial years available.
A CSR-covered company must spend at least 2% of the average net profits made during the three immediately preceding financial years. If the company has not completed three financial years, the calculation is based on the immediately preceding financial years available.
For CSR, net profit is calculated as per Section 198 of the Companies Act, 2013, subject to the prescribed exclusions and adjustments. CSR teams should take secretarial and finance review for final computation.
B. CSR Committee, Board Responsibility and Governance
Generally, yes. However, where the CSR amount to be spent does not exceed INR 50 lakh, the company need not constitute a CSR Committee and the Board discharges the CSR Committee's functions. If a company has any amount in its Unspent CSR Account, it must comply with CSR Committee-related requirements as applicable.
Normally, the CSR Committee should have three or more directors, including at least one independent director where applicable. For private companies not required to appoint an independent director, two or more directors are sufficient. Foreign companies have separate composition requirements under the CSR Rules.
The CSR Committee recommends the CSR Policy, recommends the amount of CSR expenditure, monitors the CSR Policy, and formulates or recommends the annual action plan for CSR activities.
The Board has ultimate responsibility for CSR. It must approve the CSR Policy, disclose the policy and CSR activities, ensure that CSR activities are undertaken properly, satisfy itself regarding utilisation of funds, and ensure treatment of unspent CSR amounts as per Section 135(5) and 135(6).
No. CSR projects are not approved by the Government in the ordinary course. CSR is planned, approved, executed, monitored and disclosed by the company through its Board and CSR governance processes.
It is both. The company must meet the statutory CSR spending obligation or properly transfer unspent amounts, and it must make required disclosures in the Board's Report, annual CSR report, financial statements, MCA filings and website, wherever applicable.
C. Eligible CSR Activities
CSR activities must be relatable to Schedule VII of the Companies Act. Schedule VII includes areas such as hunger, poverty, malnutrition, preventive healthcare, sanitation, safe drinking water, education, gender equality, environmental sustainability, rural development, skill development, sports, heritage, armed forces veterans' welfare, disaster management, and contributions to specified funds.
No. MCA has clarified that Schedule VII entries are broad-based and should be interpreted liberally to capture the essence of the listed subjects. However, CSR expenditure cannot be on activities beyond Schedule VII.
CSR funds may support activities that are independently eligible under Schedule VII and are undertaken in project or programme mode. However, CSR should not be treated as a mere substitute for Government budgetary responsibility. The company must ensure Board approval, CSR eligibility, utilisation, monitoring and reporting.
Generally, no. Activities undertaken outside India are not eligible CSR, except training of Indian sports personnel representing a State or Union Territory at national or international level, as permitted under the Rules.
No, if the benefit is exclusive or primarily for employees. CSR should be directed towards broader community or public benefit and not employee welfare obligations.
Pure sponsorship activities undertaken for marketing benefit are not eligible CSR. CSR should be undertaken in project or programme mode and should not be used purely as a marketing or brand-building tool, though incidental brand visibility does not by itself invalidate CSR.
No. Activities undertaken to fulfil a statutory obligation under any law in force in India are not eligible as CSR.
No. Direct or indirect contribution to any political party under Section 182 of the Companies Act is not eligible CSR.
D. CSR Implementation and Implementing Agencies
A company can implement CSR directly by itself, through eligible implementing agencies, or in collaboration with one or more companies, provided reporting and compliance requirements are met.
Eligible implementing agencies include Section 8 companies, registered public trusts, registered societies, entities established by Central or State Government, statutory bodies, and other eligible entities, subject to Rule 4 requirements, registrations and track-record conditions.
Yes, for implementing agencies undertaking CSR projects, registration on the MCA21 portal through Form CSR-1 is required. If a company implements CSR directly by itself, CSR-1 is not required for the company.
No. International organisations cannot act as CSR implementing agencies. They may, however, be engaged for limited purposes such as designing, monitoring, evaluation of CSR projects, or capacity building of CSR personnel, as permitted under the CSR Rules.
Yes. Companies can pool resources and collaborate on CSR projects, provided each company can separately report its CSR contribution, activities, outputs and compliance.
E. CSR Expenditure, Administrative Overheads and Surplus
CSR expenditure generally includes amounts spent on approved CSR projects or programmes, contributions to eligible Schedule VII funds, and eligible project-related costs. The expenditure must be linked to CSR activities approved under the CSR Policy and annual action plan.
Yes, but only up to 5% of the total CSR expenditure of the company for that financial year. Administrative overheads are expenses for general management and administration of CSR functions, while direct project design, implementation, monitoring and evaluation costs are usually treated as project costs.
No. CSR obligation is a spending obligation. Goods or services contributed in kind generally cannot be monetised and shown as CSR expenditure unless there is actual eligible expenditure as per the CSR Rules.
No. Contribution to the corpus of an entity is not admissible as CSR expenditure unless specifically permitted under the legal framework, and companies should avoid treating generic corpus grants as CSR.
Surplus arising out of CSR activities cannot become business profit of the company. It must be ploughed back into the same project, transferred to the Unspent CSR Account, or used for CSR purposes as prescribed.
CSR expenditure is not generally treated as business expenditure for income-tax deduction merely because it is CSR. The exact tax treatment should be reviewed with tax advisors, especially where contributions are made to notified funds or eligible institutions.
F. Ongoing Projects and Unspent CSR Amount
An ongoing project is a multi-year CSR project having a defined timeline, with a maximum permissible period of three financial years excluding the year of commencement. The project should have identifiable commencement and completion dates.
An ongoing project is generally considered commenced when the company has taken a concrete implementation step, such as issuing a work order or awarding the contract for execution of the project.
Yes, but only under exceptional circumstances, within the permissible period, on the recommendation of the CSR Committee and with reasonable justification recorded by the Board.
The unspent amount relating to ongoing projects must be transferred to a separate Unspent CSR Account within 30 days from the end of the financial year and used for the approved ongoing project within the prescribed period.
The company must transfer such unspent amount to a fund specified in Schedule VII within six months from the end of the financial year.
No. Unspent CSR amount not relating to an ongoing project must be transferred to a Schedule VII fund and should not be used as a delayed spending window for fresh CSR activities.
No. The Unspent CSR Account is a dedicated account for unspent CSR amounts relating to ongoing projects. It cannot be used for general business purposes, collateral, charge creation or other business activity.
G. Impact Assessment
Impact assessment is mandatory for companies having an average CSR obligation of INR 10 crore or more in the immediately preceding three financial years and having CSR projects with outlays of INR 1 crore or more, completed at least one year before undertaking the impact assessment.
The impact assessment must be conducted by an independent agency. The Board may decide the eligibility and selection criteria for the agency.
Yes. Expenditure on impact assessment can be booked towards CSR for that financial year, subject to the prescribed ceiling: not exceeding 2% of total CSR expenditure for that financial year or INR 50 lakh, whichever is higher.
The impact assessment report should be placed before the Board and annexed to the annual CSR report. Providing a web link to the complete report along with an executive summary is generally treated as a good disclosure practice, subject to the latest MCA requirements.
H. Reporting, Disclosures and Compliance
A CSR-covered company must disclose its CSR Policy, CSR Committee composition, approved projects, CSR expenditure, unspent amounts, ongoing projects, impact assessment details where applicable, and other prescribed particulars in the Board's Report, annual CSR report and on the company website, wherever applicable.
Yes. Companies covered under CSR provisions are required to file CSR-related reporting in Form CSR-2 as prescribed under the Companies (Accounts) Rules and MCA requirements, along with other statutory filings as applicable.
Non-compliance with provisions relating to transfer of unspent CSR amount may attract monetary penalties on the company and officers in default. The penalty framework should be checked against the latest version of Section 135 and MCA notifications at the time of compliance.
No. Penalty is in addition to the obligation. It is not an alternative to transferring or spending the required CSR amount in the prescribed manner.
The CSR regime has moved from a largely 'comply or explain' approach towards a more accountable framework involving Board responsibility, mandatory treatment of unspent amounts, CSR-1 registration for implementing agencies, annual action plans, impact assessment for large projects, tighter reporting and civil penalties for non-compliance.
I. Practical CSR Planning Questions
A company should ensure that the project is Schedule VII-aligned, community-facing, approved by the Board, supported by a clear implementation plan, has measurable outputs and outcomes, follows fund utilisation discipline, and has credible monitoring and documentation.
Key documents include CSR Policy, CSR Committee minutes, Board approvals, annual action plan, project proposals, agreements or MoUs with implementing agencies, CSR-1 details, 12A/80G/exemption records of agencies, utilisation certificates, activity reports, invoices, geo-tagged evidence where possible, beneficiary records, impact assessment reports where applicable, and annual CSR disclosures.
Yes. CSR may be aligned with the company's sectoral strengths or business expertise, provided it is not undertaken as a marketing activity, does not serve only business interests, and remains within Schedule VII.
Employee volunteering may be part of a CSR initiative, but the monetised value of employee time is generally not counted as CSR expenditure. Actual eligible project expenditure may be counted subject to CSR Rules.
CSR projects should ideally move beyond one-time donation models and follow a project or programme approach: needs assessment, baseline, defined geography, target community, measurable deliverables, convergence opportunities, sustainability plan, monitoring framework, budget controls and outcome reporting.
Companies should conduct due diligence on legal status, CSR-1 registration, 12A/80G/exemption status, track record, governance, financial systems, local presence, safeguarding practices, monitoring systems and ability to provide utilisation and reporting evidence.
Legally, CSR is a compliance requirement for eligible companies. Strategically, it is also an opportunity to create measurable social return, build institutional partnerships, support public systems, strengthen local communities and contribute to India's development priorities.
J. CSR Through Zero Coupon Zero Principal Instruments and Social Stock Exchange
Zero Coupon Zero Principal, or ZCZP, instruments are securities issued by eligible Not-for-Profit Organisations through the Social Stock Exchange framework. These instruments do not carry interest and do not require repayment of principal. They are designed as a regulated social finance instrument for funding eligible social impact projects.
Yes. As per the 2026 MCA amendment to the CSR framework, a company may carry out CSR activities by subscribing to Zero Coupon Zero Principal instruments issued by eligible Not-for-Profit Organisations on the Social Stock Exchange, subject to prescribed conditions.
Yes. Expenditure through Zero Coupon Zero Principal instruments should not exceed 10% of the total CSR expenditure of the company for that financial year.
No. Since the ZCZP route is capped, a company cannot use this route for its entire CSR obligation unless its total CSR obligation and the prescribed cap permit only that limited amount. The remaining CSR obligation must be met through other permissible CSR routes.
ZCZP instruments can be issued by eligible Not-for-Profit Organisations registered with the Social Stock Exchange segment of a recognised stock exchange and in accordance with SEBI regulations.
No. The company should still ensure that the instrument, issuing organisation, stated social project, utilisation, disclosures and reporting requirements are aligned with the CSR Rules, Schedule VII and applicable SEBI and Social Stock Exchange norms.
No. The NGO or NPO must be eligible under the Social Stock Exchange framework and issue the instrument in accordance with applicable SEBI regulations. Regular grants to eligible implementing agencies and subscription to ZCZP instruments are separate routes and should not be confused.
A normal CSR grant is usually made directly to an eligible implementing agency or project. The ZCZP route allows the company to subscribe to a regulated instrument issued through the Social Stock Exchange, creating a more formal, disclosure-led and market-linked social finance mechanism.
Yes. Even where CSR is routed through ZCZP instruments, the Board and CSR Committee should retain oversight on eligibility, utilisation, reporting, outcome tracking and regulatory compliance.
Yes. As a good governance practice, the CSR Committee should recommend and the Board should approve the use of the ZCZP route, including the issuing NPO, project purpose, amount, cap compliance, Schedule VII alignment and reporting mechanism.
K. What Is Not CSR?
The following are generally not treated as CSR: activities undertaken in the normal course of business; activities outside India except permitted sports training; political contributions; activities benefitting only employees; statutory obligations; sponsorships primarily for marketing; and activities not aligned with Schedule VII.
No. Activities undertaken in the normal course of business are not eligible CSR. CSR should be a distinct social responsibility activity and not part of the company's routine commercial operations.
No. Expenses that benefit only the employees of the company and their families are not eligible CSR. Examples include staff welfare schemes, employee medical benefits, staff training, employee recreation, internal health camps only for employees, or benefits restricted to the company's workforce.
No. Any activity undertaken to meet a statutory obligation under any law in India cannot be counted as CSR. CSR must go beyond legal compliance.
No. Direct or indirect contribution to political parties is not eligible as CSR expenditure.
Event sponsorships undertaken mainly for brand promotion, marketing visibility, customer acquisition, business development or public relations are not eligible CSR. However, support to an eligible community-facing project or public-interest event may qualify if it is Schedule VII-aligned and not primarily promotional.
No. CSR cannot be used as a substitute for advertising, sales promotion, brand activation or corporate image-building. Incidental visibility of the company in a genuine CSR project is acceptable, but the primary purpose must be social impact.
Yes, if it is aligned with Schedule VII and undertaken as an eligible CSR activity. However, relief provided only to employees or business partners of the company would not qualify as CSR.
Generally, CSR is a spending obligation. Contribution of goods, services, employee time or internal resources should not be monetised and shown as CSR expenditure unless there is actual eligible expenditure incurred as per CSR Rules.
Usually no, if the activity directly supports the company's commercial network or business objectives. It may qualify only if the programme is community-facing, Schedule VII-aligned, not restricted to business partners, and structured as an independent CSR project.
No. Commercial discounts, free samples, loyalty schemes, customer promotions or sales-linked offers are not CSR.
No. Expenses incurred to meet pollution control norms, environmental clearances, consent conditions, safety requirements or any legally mandated compliance are not CSR. Voluntary environmental projects beyond statutory obligations may qualify if aligned with Schedule VII.
CSR should not be used for activities that are purely religious in nature or meant to support a particular religious group. However, heritage conservation or restoration of sites of historical, cultural or artistic importance may qualify if aligned with Schedule VII and structured as a public-interest project.
One-time donations may qualify if made to eligible funds or eligible implementing agencies for Schedule VII activities. However, companies are encouraged to undertake CSR in project or programme mode with clear objectives, monitoring and reporting.
No. CSR funds should not be used to create or improve assets for private benefit of promoters, directors, employees, related parties or their families. CSR assets should serve a public or community purpose and must be governed as per CSR Rules.
L. Employee-Benefit-Related CSR FAQs
Yes, but only incidentally. If a CSR project is designed for the broader community and employees are only incidental beneficiaries, it may still qualify. However, if the activity is designed primarily or exclusively for employees and their families, it will not qualify as CSR.
A health camp conducted only for employees or their families cannot be counted as CSR. A community health camp in nearby villages, urban settlements, schools or public institutions may qualify if it is open to the target community and aligned with Schedule VII.
No. Employee vaccination, insurance, medical support, wellness programmes or workplace health benefits are employee welfare or HR expenses, not CSR. Community vaccination or public health programmes may qualify if they are Schedule VII-aligned.
No. Scholarships, school fee support or education benefits restricted to children of employees are employee benefits and not CSR. Education programmes for the wider community, disadvantaged students or public schools may qualify.
No. Skill development or training of company employees is not CSR. Skill development for unemployed youth, women, persons with disabilities, rural communities, artisans, SHGs or other eligible community groups may qualify.
Employee volunteering as an activity can support CSR, but the monetary value of employee time should not be counted as CSR expenditure. Actual eligible project expenses, such as training material, community mobilisation, venue, transport, project tools or implementation support, may be counted if aligned with CSR Rules.
Reasonable project-related expenses may be considered if they are directly linked to implementation of an approved CSR project. However, routine employee engagement, team-building, offsites or internal volunteering events should not be treated as CSR expenditure.
If the support is part of statutory labour welfare, contractual obligation, workplace compliance or vendor responsibility, it is not CSR. If the programme is community-facing, not restricted to the company's workforce or supply chain, and aligned with Schedule VII, it may be considered CSR.
No. Workplace safety, PPE, occupational health and statutory worker protection measures are legal or business responsibilities and not CSR. Community safety, public health, road safety or disaster preparedness projects may qualify if they meet CSR criteria.
Yes. The CSR law allows companies to give preference to local areas and areas around their operations. However, the project should serve the community and should not be limited to employees, vendors, customers or business stakeholders.
They may be included only if the project is open to the broader target community and employee families are not the exclusive or dominant beneficiaries. The company should document the community need, eligibility criteria and beneficiary selection process.
Internal employee engagement events, CSR-day celebrations, awareness sessions for staff or internal campaigns should not be counted as CSR unless they are part of an approved community-facing CSR project and involve actual eligible expenditure for community benefit.
CSR team salary and general CSR management costs may fall under administrative overheads, subject to the prescribed cap. Direct project staff costs specifically linked to implementation of a CSR project may be treated as project cost, depending on the nature of the role and documentation.
Training of internal employees on CSR compliance, ESG reporting or company policy is generally an internal administrative or governance cost, not direct CSR project expenditure. It may fall under administrative overheads if properly linked to CSR management and within the allowed cap.
A simple test is: Who is the primary beneficiary? If the answer is employees, their families, the company's workforce, vendors, customers or business ecosystem, it is likely not CSR. If the answer is the broader community or a clearly defined vulnerable or eligible group under Schedule VII, and the project is Board-approved and properly documented, it may qualify as CSR.
