CSR Advisory & Form CSR-2 Filing

Section 135 of the Companies Act, 2013 requires every company with a net worth of ₹500 crore or more, or turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more, during the immediately preceding financial year, to constitute a Corporate Social Responsibility Committee of the Board and to spend, in every financial year, at least 2% of the average net profits made during the three immediately preceding financial years (or such shorter period, where the company has not completed three financial years), on CSR activities specified in Schedule VII.

Section 135(5) and the second proviso require unspent amounts pertaining to an ongoing project to be transferred to a separate "Unspent CSR Account" within 30 days of the end of the financial year and utilised within three financial years, failing which the balance must be transferred to a fund specified in Schedule VII (such as the PM National Relief Fund) within 30 days of expiry of that period; unspent amounts not linked to any ongoing project must be transferred to such a specified fund within six months of the financial year-end.

Every company covered by Section 135 must file Form CSR-2 (introduced by the MCA notification dated 11 February 2022) as an addendum to its financial statement filing, reporting CSR Committee composition, amount required to be spent, and amount actually spent, for the relevant financial year.

CSR compliance under Section 135 of the Companies Act 2013 applies to companies that cross the prescribed thresholds — net worth of ₹500 crore or more, turnover of ₹1000 crore or more, or net profit of ₹5 crore or more in a financial year. Such companies must constitute a CSR committee, spend at least 2% of their average net profits of the three preceding years on CSR activities in the areas listed in Schedule VII of the Act, and report the spending. The details — eligible activities, implementing agencies, unspent amounts — are governed by the Companies (CSR Policy) Rules 2014, and the annual CSR return is filed with the MCA in Form CSR-2.

The compliance is about spending, reporting and documentation together. The CSR committee recommends the policy and the activities, the board approves, and the spend must go to eligible activities through eligible channels — including implementing agencies registered in Form CSR-1 under the CSR Rules 2014. Unspent amounts have their own discipline: they must be transferred to the prescribed funds within the timelines the Act sets, and the transfer is a compliance event in itself.

The cost of CSR non-compliance is real money. Section 135 as amended provides that a company failing to comply with the CSR provisions is liable to the penalty framework of the Act (VERIFY: the current penalty provision and quantum for CSR non-compliance under Section 135 as amended), and the reporting gap shows up in the MCA record and in investor ESG screens. For a company that is doing the social good anyway, failing the paperwork converts a good deed into a compliance failure.

This service is for companies within the Section 135 thresholds. We map your CSR obligation, structure the policy and activities against Schedule VII and the CSR Rules 2014, verify implementing agencies and Form CSR-1 registrations, document the spend, manage the unspent-amount transfer timelines, and file Form CSR-2 with the MCA on time.