Alerts & Updates 22nd Sep 2022

MCA amends CSR norms to further CSR objectives


Tanvi Goyal Associate Partner |
Manendra Singh Partner | Mumbai

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With the objective of providing wider and clearer regulation for companies complying with Corporate Social Responsibility (“CSR”) norms under the Companies Act, 2013 (“CA2013”), Ministry of Corporate Affairs (“MCA”) has amended the Companies (Corporate Social Responsibility Policy) Rules, 2014 (“CSR Rules”).

  • The amendments including following key changes:
    • A company having any amount in its Unspent Corporate Social Responsibility Account (“UCSRA”) related to ongoing projects shall constitute a CSR Committee to comply with the CSR norms under CA2013;
    • Removal of exemption from complying with CSR norms given to certain companies which ceased to come within the purview of Section 135;
    • Clarity on implementing agencies which can carry out CSR activities;
    • Changes in the amount that can be booked as expenditure towards Corporate Social Responsibility for companies undertaking impact assessment;
    • New format for the Annual Report on CSR Activities has been provided along with revision of e-form CSR–1.
  • The above changes have been analyzed below
    Change Implication
    Compliance with CSR norms – Amount lying in UCSRA

    Under Section 135, any amount remaining unspent pursuant to any ongoing project, is required to be transferred by the company within a period of 30 days from the end of the financial year to UCSRA. Such amount shall be spent by the company in pursuance of its obligation towards the CSR Policy within a period of 3 financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of 30 days from the date of completion of the third financial year.

    Now, as per the amendment, a company having any amount in its UCSRA is required to constitute a CSR Committee and comply with the provisions contained in Section 135 (2) to (6) of CA2013.

    Removal of exemption from complying with CSR norms given to certain companies which ceased to come within the purview of section 135 Every company which ceased to be a company covered under section 135(1) for three consecutive financial years was not required to:

    (a) constitute a CSR Committee; and

    (b) comply with the provisions contained in Section 135(2) to 135 (6), till such time it met the criteria specified in section 135(1).

    Aforesaid exemption has been removed.

    Implementing agencies – Scope of entities clarified | Statutory entities clarified Now, if a company wants to set up entities to carry out CSR or wish to carry out through other entities not set up by it, then such entities would need to be a company established under section 8 of CA2013, or a registered public trust or a registered society, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 or registered under section 12A and approved under 80G of the Income Tax Act, 1961.

    Further, in the event of implementing agency being statutory body constituted under an Act of Parliament or State legislature, then such body needs to be one constituted to undertake activities covered in Schedule VII of CA2013.

    Impact assessment – change in CSR booking amount A Company undertaking impact assessment may book the expenditure towards CSR for that financial year, which shall not exceed two percent (earlier “five percent”) of the total CSR expenditure for that financial year or fifty lakh rupees, whichever is higher (earlier “whichever is less”).
  • Additionally, the Annexure II of the CSR Rules which provides Format for the Annual Report on CSR  Activities has been substituted with a new format and in the e-form CSR–1, serial number 1 and the entries relating thereto, the “1. Nature of the entity” serial number enlisting the entities through which CSR activities can be carried out by a company, has been substituted with a revised list.

    The above amendment has been made vide Companies (Corporate Social Responsibility Policy) Amendment Rules, 2022 dated September 20, 2022 (available here) and is effective from September 20, 2022.

     We trust you will find this an interesting read. For any queries or comments on this update, please feel free to contact us at or write to our authors:
    Manendra Singh, Associate Partner  – ;
    Tanvi Goyal, Principal Associate  –;
    Ambareen Khatri, Associate –

Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion or advice. This document is not intended to address the circumstances of any individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein