{"id":5949,"date":"2026-05-13T08:08:39","date_gmt":"2026-05-13T08:08:39","guid":{"rendered":"https:\/\/digiwic.in\/spgindia\/?p=5949"},"modified":"2026-05-13T08:09:09","modified_gmt":"2026-05-13T08:09:09","slug":"csr-key-disclosures-and-reporting-gaps-edition-7","status":"publish","type":"post","link":"https:\/\/digiwic.in\/spgindia\/csr-key-disclosures-and-reporting-gaps-edition-7\/","title":{"rendered":"CSR Key Disclosures and reporting gaps Edition 7"},"content":{"rendered":"

Section 135 of the Companies Act, 2013 established the statutory framework governing Corporate Social Responsibility (CSR) in India, transforming CSR from a voluntary goodwill exercise into a regulated compliance regime. <\/strong>What was once viewed primarily as a spending obligation has now evolved into a governance-driven framework requiring structured oversight, timely execution, and transparent disclosures. Over the years, regulatory scrutiny has revealed that CSR non-compliance is rarely the result of a company choosing not to spend. More often, it arises from missed disclosures, delays in transferring unspent amounts, gaps in Board oversight, and simple reporting oversights.<\/p>\n

Key Requirements Under Section 135<\/u><\/strong><\/p>\n\n\n\n\n\n\n\n\n
Sub Section\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Compliance Mandate<\/strong><\/td>\n<\/tr>\n
135 (1)<\/p>\n

Constitution of CSR Committee<\/strong><\/td>\n

Every company having net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more or a net profit of Rs. 5 crore or more during the immediately preceding FY shall constitute a CSR Committee of the Board consisting of 3 or more Directors, out of which at least 1 director shall be an independent director.<\/p>\n

Provided where a company is not required to appoint an independent director under section 149(4), it shall have in its CSR Committee 2 or more Directors.<\/em><\/td>\n<\/tr>\n

135 (2)<\/p>\n

Disclosure<\/strong><\/td>\n

Board\u2019s report shall disclose the composition of the CSR Committee.<\/td>\n<\/tr>\n
135 (3)<\/p>\n

TOR of CSR<\/strong><\/p>\n

Committee<\/strong><\/td>\n

The CSR Committee shall:<\/p>\n

a.\u00a0\u00a0\u00a0\u00a0\u00a0 formulate and recommend to Board, a CSR Policy;<\/p>\n

b.\u00a0\u00a0\u00a0\u00a0\u00a0 recommend the amount of expenditure to be incurred on the CSR activities; and<\/p>\n

c.\u00a0\u00a0\u00a0\u00a0\u00a0 monitor the CSR Policy of the company.<\/p>\n

U\/S 135 (9): Where the amount to be spent by a company does not exceed Rs. 50 lakh<\/u><\/strong>, the requirement for constitution of the CSR Committee shall not be applicable.<\/em><\/td>\n<\/tr>\n

135 (4)<\/p>\n

CSR Policy<\/strong><\/td>\n

The Board of every company referred to in sub-section (1) shall,<\/p>\n

a.\u00a0\u00a0\u00a0\u00a0\u00a0 after considering recommendations by the CSR Committee, approve the CSR Policy and disclose contents of such Policy in its report and also place it on the company’s website, if any, and<\/p>\n

b.\u00a0\u00a0\u00a0\u00a0\u00a0 ensure that the activities as are included in CSR Policy of the company are undertaken by the company.<\/td>\n<\/tr>\n

135 (5)<\/p>\n

CSR Spent<\/strong><\/td>\n

Board of every company referred to in sec 135(1), shall ensure that the company spends, in every FY, at least 2% of the average net profits of the company made during the 3 immediately preceding FYs in pursuance of its CSR Policy.<\/p>\n

\u00a0<\/strong><\/p>\n

The company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for CSR activities.<\/em><\/p>\n

\u00a0<\/strong><\/p>\n

If company fails to spend such amount, the Board shall, in its report specify the reasons for not spending <\/strong>the amount and, unless unspent amount relates to any ongoing project, transfer such unspent amount to a Fund specified in Schedule VII, within a period of 6 months of the expiry of the FY.<\/em><\/p>\n

If the company spends an amount in excess of the requirements, such company may set off such excess amount <\/strong>against the requirement to spend.<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n\n\n\n\n
135 (6)<\/p>\n

Unspent Amount<\/strong><\/td>\n

Any unspent amount pursuant to any ongoing project shall be transferred to a special account (Unspent CSR Account<\/u><\/em>) in any scheduled bank within 30 days from end of fy.<\/p>\n

Such amount shall be spent by the company within a period of 3 FYs from the date of such transfer as per its obligation towards the CSR Policy, 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 3rd<\/sup> FY.<\/td>\n<\/tr>\n

135 (7)<\/p>\n

Penalty<\/strong><\/td>\n

Penalty for non-compliance u\/s 5 or 6<\/u><\/em>:<\/p>\n

On Company: Twice the amount required to be transferred by the company<\/u> to the Fund specified in Schedule VII<\/u> or <\/strong>the Unspent CSR Account or Rs. 1 crore, whichever is less; &<\/p>\n

On every officer of the company<\/u> who is in default: 1\/10th<\/sup> of the amount required to be transferred by the company<\/u> to such Fund specified in Schedule VII<\/u>, or the Unspent CSR Account or Rs. 2 lakh, whichever is less.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/strong><\/p>\n

Companies (Corporate Social Responsibility Policy) Rules, 2014<\/u><\/strong>\u00a0<\/strong><\/p>\n\n\n\n\n\n\n\n\n
Rule<\/strong><\/td>\nCompliance Mandate<\/strong><\/td>\n<\/tr>\n
2(d)<\/strong><\/td>\nCSR shall not include the following, namely:<\/p>\n

i.\u00a0\u00a0\u00a0\u00a0 activities undertaken in pursuance of normal course of business of the company;<\/p>\n

ii.\u00a0\u00a0\u00a0 any activity undertaken by the company outside India except for training of Indian sports personnel representing any State or Union territory at national level or India at international level;<\/p>\n

iii.\u00a0\u00a0 contribution of any amount directly or indirectly to any political party under section 182 of the Act;<\/p>\n

iv.\u00a0\u00a0 activities benefitting employees of the company;<\/p>\n

v.\u00a0\u00a0\u00a0 activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services;<\/p>\n

vi.\u00a0\u00a0 activities carried out for fulfilment of any other statutory obligations under any law in force in India;<\/td>\n<\/tr>\n

7(1)<\/strong><\/td>\nThe board shall ensure that the administrative overheads shall not exceed five percent of<\/p>\n

total CSR expenditure of the company for the financial year.<\/td>\n<\/tr>\n

7(2)<\/strong><\/td>\nAny surplus arising out of the CSR activities shall not form part of the business profit of a company and shall be ploughed back into the same project or shall be transferred to the Unspent CSR Account and spent in pursuance of CSR policy and annual action plan of the company or transfer to a Fund specified in Schedule VII, within a period of 6 months of the<\/p>\n

expiry of the FY.<\/td>\n<\/tr>\n

7(3)<\/strong><\/td>\nWhere a company spends an amount in excess of requirement, such excess amount may be set off against the requirement to spend up to immediate succeeding 3 FYs provided<\/p>\n

that the excess amount available for set off shall not include the surplus arising out of the CSR activities and the Board of the company shall pass a resolution to that effect.<\/td>\n<\/tr>\n

7(4)<\/strong><\/td>\nThe CSR amount may be spent by a company for creation or acquisition of a capital asset, which shall be held by \u2013<\/p>\n

a.\u00a0\u00a0\u00a0\u00a0\u00a0 a company established under section 8 of the Act, or a Registered Public Trust or Registered Society, having charitable objects and CSR Registration Number or<\/p>\n

b.\u00a0\u00a0\u00a0\u00a0\u00a0 beneficiaries of the said CSR project, in the form of self-help groups, collectives, entities; or<\/p>\n

c.\u00a0\u00a0\u00a0\u00a0\u00a0 a public authority:<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

ADJUDICATION ORDERS (ROC\/RD)<\/u><\/strong><\/p>\n

Recent adjudication orders indicate that regulators are increasingly focusing on compliance with CSR spending and timely transfer of unspent amounts, along with proper disclosures; failures in these areas \u2014 including non-transfer of unspent CSR funds, inadequate reporting, or incomplete project-wise disclosures<\/p>\n

\u2014 are being treated as significant non-compliances and have resulted in substantial penalties on companies and officers in default.<\/p>\n\n\n\n\n\n\n\n\n\n\n
Company<\/strong><\/td>\nDate Orde<\/strong><\/td>\nof<\/strong><\/p>\n

r<\/strong><\/td>\n

Authority<\/strong><\/td>\nProvision Violated<\/strong><\/td>\nNature of Non-Compliance<\/strong><\/td>\n<\/tr>\n
M\/s Bigtec Private Limited<\/strong><\/td>\nMarch 26,<\/p>\n

2025<\/td>\n

ROC<\/p>\n

(Bangalore)<\/td>\n

Section 135(5)<\/td>\nThe Company failed to spent the CSR Obligation\/ transfer for the financial year 2021 \u2013 22. It was a suo moto application.<\/td>\n<\/tr>\n
M\/s Xiaomi Technology India Private<\/strong><\/p>\n

Limited<\/strong><\/td>\n

Sept 2024<\/td>\n13,<\/td>\nROC<\/p>\n

(Bangalore)<\/td>\n

Section 135(5)<\/td>\nThe Company failed to transfer the unspent amount as specified in Schedule VII of the Act within six months from the<\/p>\n

end of the financial year.<\/td>\n<\/tr>\n

M\/s SIVARAJ SPINNING MILLS PRIVATE<\/strong><\/p>\n

LIMITED<\/strong><\/td>\n

August 30,<\/p>\n

2024<\/td>\n

ROC<\/p>\n

(Coimbatore)<\/td>\n

Section 135(4)(a) r\/w Section<\/p>\n

135(3)(o) and<\/td>\n

The Company failed to disclose the CSR spending details in tabular form as given in Companies (CSR) Rules, 2014.<\/td>\n<\/tr>\n
M\/s Workforce Logiq India Private Limited<\/strong><\/td>\nMay 24,<\/p>\n

2024<\/td>\n

ROC<\/p>\n

(Karnataka) & Adjudication<\/p>\n

Officer<\/td>\n

Section135(5) and 135(6)<\/td>\nThe Company failed to transfer the unspent amount as specified in Schedule VII of the Act within six months of the expiry of the financial year.<\/td>\n<\/tr>\n
M\/s Freudenberg Performance Materials India<\/strong><\/p>\n

Private Limited<\/strong><\/td>\n

August 21,<\/p>\n

2024<\/td>\n

ROC (Tamil Nadu, A&N, Chennai)<\/td>\nSection135(5) and 135(6)<\/td>\nFailure to transfer the unspent amount to an eligible government fund within 6 months & also fails to explain the reason in the board report.<\/td>\n<\/tr>\n
M\/s Kony India Private Limited<\/strong><\/td>\nDec 13,<\/p>\n

2023<\/td>\n

RD<\/p>\n

(Hyderabad)<\/td>\n

Section 135(6)<\/td>\nFailure to transfer unspent CSR Amount into a separate Unspent CSR Account in a bank within a period of thirty days from<\/p>\n

the end of a Financial year.<\/td>\n<\/tr>\n

M\/s Saddles International Automotive & Aviation Interiors Private<\/strong><\/p>\n

Limited<\/strong><\/td>\n

Jan\u00a0 08,<\/p>\n

2025<\/td>\n

RD<\/p>\n

(Hyderabad)<\/td>\n

Section135(5) and 135(6)<\/td>\n–\u00a0 Failure to adopt the CSR Policy for 3<\/p>\n

financial years.<\/p>\n

–\u00a0 Failure\u00a0\u00a0\u00a0\u00a0 to\u00a0\u00a0\u00a0\u00a0 spend\u00a0\u00a0\u00a0\u00a0 the\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 required\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 CSR obligation on specific CSR activities.<\/p>\n

–\u00a0 Non reporting or failure to disclose the adequate reasons in the Board Report.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

Insight: CSR compliance is no longer about spending – it\u2019s about governance, transparency, and accountability<\/strong><\/p>\n

CSR compliance is no longer about \u201chow much you spent\u201d \u2014 it\u2019s about how well you governed, disclosed, and documented it. <\/strong>A proactive CSR compliance audit not only ensures alignment with the law but also strengthens corporate reputation, and helps avoid costly penalties. CSR compliance today is no longer measured by how much a company spends, but by how responsibly and transparently it governs, discloses,<\/p>\n

and documents its CSR actions. Effective CSR compliance requires identifying eligible social causes, ensuring proper oversight through a functioning CSR Committee, maintaining transparency through clear policy disclosures, and accurately reporting CSR activities in statutory filings.<\/p>\n

CS Suresh Pandey<\/strong><\/p>\n

Practising Company Secretary<\/strong><\/p>\n

SPG & Associates 9968300649<\/strong><\/p>\n

suresh@spgindia.co.in<\/strong><\/a><\/p>\n

Coming Up in Edition 8<\/strong>: Executive Compensation in India \u2013 Statutory Limits, Approvals & Governance Requirements<\/p>\n

 <\/p>\n

\n

Disclaimer: This content is intended solely for research and knowledge-sharing purposes among professionals, based on information available in the public domain. It is not intended to malign any individual or entity, nor should it be construed as a solicitation or used for any commercial or promotional purpose. The views expressed do not constitute a legal opinion or professional advice. While utmost care has been taken to ensure the accuracy of the content, no responsibility is accepted for any errors or omissions. Readers are advised to verify the information independently from official and original sources before taking any action based on the same.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Section 135 of the Companies Act, 2013 established the statutory framework governing Corporate Social Responsibility (CSR) in India, transforming CSR from a voluntary goodwill exercise into a regulated compliance regime. What was once viewed primarily as a spending obligation has now evolved into a governance-driven framework requiring structured oversight, timely execution, and transparent disclosures. Over […]<\/p>\n","protected":false},"author":1,"featured_media":3572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[34],"tags":[],"year_tax":[],"month_tax":[],"class_list":["post-5949","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-audit"],"acf":[],"featured_image_src":{"landsacpe":["https:\/\/digiwic.in\/spgindia\/wp-content\/uploads\/2025\/01\/accounting-project-thumb-6.jpg",356,205,false],"list":["https:\/\/digiwic.in\/spgindia\/wp-content\/uploads\/2025\/01\/accounting-project-thumb-6.jpg",356,205,false],"medium":["https:\/\/digiwic.in\/spgindia\/wp-content\/uploads\/2025\/01\/accounting-project-thumb-6-300x173.jpg",300,173,true],"full":["https:\/\/digiwic.in\/spgindia\/wp-content\/uploads\/2025\/01\/accounting-project-thumb-6.jpg",356,205,false]},"_links":{"self":[{"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/posts\/5949","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/comments?post=5949"}],"version-history":[{"count":2,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/posts\/5949\/revisions"}],"predecessor-version":[{"id":5951,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/posts\/5949\/revisions\/5951"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/media\/3572"}],"wp:attachment":[{"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/media?parent=5949"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/categories?post=5949"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/tags?post=5949"},{"taxonomy":"year_tax","embeddable":true,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/year_tax?post=5949"},{"taxonomy":"month_tax","embeddable":true,"href":"https:\/\/digiwic.in\/spgindia\/wp-json\/wp\/v2\/month_tax?post=5949"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}