Money That Companies Have Invested In CSR: CSR Funding Companies In India Act 2013 | Semantic Taxgen Pvt Ltd


CSR funding companies in India

Money that Companies have invested in CSR: CSR funding companies in India act 2013

July 08, 2024


In this article we will discuss in depth about CSR Funding companies in india. As per the Companies Act, 2013, this is one of the largest experiments in introducing the concept of CSR, which is a progressing concept of socio-economic development, and there are some statutory obligations on corporations to take initiatives towards social, environmental, and economic obligations.

Applicability of CSR:

CSR provisions are applicable to companies that fulfill the following criteria during the immediately preceding financial year: a net worth of 500 crore or more, a turnover of 1000 crore or more, and a net profit of 5 crore or more. Every such company is required to constitute a CSR committee. If the contribution is more than 50 lakh, then there is no need to constitute the CSR committee. CSR provisions are applicable to holdings, subsidiaries, and foreign companies if branches are in India and fulfill the above criteria.

CSR spending

As per Section 135 of the Companies Act, 2013, it is the responsibility of the board to make sure that the company spends at least 2% of the average net profit of the company that was made during the three preceding financial years as per CSR policy and adopts the annual action plan of the company. However, in the case of a newly incorporated company that has not completed the three financial years since its incorporation, such a number of financial years shall be considered for the purpose of contribution.

Unspent Amount

In any financial year, if a company is unable to spend an amount on CSR activities, then the board of directors has to disclose the reason for non-spending the amount in the board report. If the board has not approved any multiyear ongoing project for CSR spending, then the unspent amount has to be transferred within 6 months of the expiry of that financial year to any of the funds specified in Schedule VII of the Act. The amount is transferred to an unspent CSR account that is utilized for regular business.

Excess spending

This provision says that if a company spends an amount in excess of the limit, then such company may set off such excess amount for the number of financial years, and the setoff can be claimed up to immediately succeeding three financial years, but there are two conditions:

  • First, the excess amount should not include the surplus arising out of the CSR activities.
  • The board of the company shall pass a resolution.

Surplus arising out of CSR projects

Any surplus arising out of the CSR activities shall not be part of the business profit of the company.

  • It shall be ploughed back into the same project and shall be included in the calculation of the amount spent by the company within the limit, but not included if access is within the limit or for claims set off in the next three financial years.
  • It shall be transferred to the unspent CSR account and shall be spent in accordance with the CSR policy and the annual action plan of the company. It shall also be transferred to the funds account as per CSR policy in the period of the expiration of the financial year.

Administrative Overheads

Through institutions with an established track record of at least 3 financial years, they build the CSR capacities of their own personnel as well as those of their implementing agencies, but such expenditures should not exceed 5% of the total CSR expenditure of the company in one financial year.

“Administrative Overheads” means the expenses incurred by the company for general management and administration of CSR functions in the company but shall not include those expenses that are directly related to the design, implementation, monitoring, and evaluation of a particular CSR project or program.

In this case, salaries paid to CSR staff who are working in administrative activities cannot be considered in the project cost and shall be part of administrative overhead. If any expense is part of the project cost, then we need to consider it in the CSR project cost. As per MCA clarification, “pro bono” services provided by employees would not be considered CSR expenditures.

Creation of Capital Assets

The company incurred CSR expenditures for the creation or acquisition of a capital asset. However, such a capital asset held by a company, which is established under Section 8 of the Act, or beneficiaries of the CSR project, is subject to public authority.

Corpus Funding

As per rule, CSR expenditure would include all expenditures, including contributions to the corpus, projects, or programs relating to CSR activities, which are approved by the board based on the recommendations of the CSR committee. As per notification, any contribution to the corpus of a trust, society, or section 8 company will be considered a CSR expenditure.

  • The trust, society, and Section 8 Company are specially formed for the purpose of undertaking CSR activities.
  • Corpus is covered in Schedule VII of the Act.

CSR Monitoring

The word monitor is derived from “warn.” Monitoring is the process of measuring, recording, collecting, processing, and communicating information to assist project management decision-making. It is an information system for decisions and continuous activity; it begins with the start of a project and ends with the completion of the project, and this is monitored by the board of directors of a company for the implementation of the project.

A periodic progress report on the CSR activities of the company should be placed before the CSR committee and the board. On the basis of such reports, the CSR committee and/or the Board may recommend appropriate actions for course corrections, if need be.

To ensure that the funds are prudently utilized for the intended purpose, the company should place appropriate checks on the utilization of funds. The funds should be released in a phased manner upon full satisfaction with the utilization of the funds previously given.

Other modalities of utilization of funds and implementation schedules for the projects or programs and the manner of execution of the same are expected to be prescribed in the annual action plan prepared under Rule 5(2) of the CSR Rules.


CSR is an integral part of the CSR activity and spends money according to limits. If there is an excess amount, the company can set it off in any financial year. Any company that has fulfilled the application but has not spent the money has to transfer the amount within 6 months of the end of the financial year as per schedule. All activities are monitored by the board of directors of a company for the implementation of the project.

“Corporate Social Responsibility CSR and Permissible Activities: A Comprehensive Guide”

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DISCLAIMER: The information provided in this article is intended for general informational purposes only and is based on the latest guidelines and regulations. While we strive to ensure the accuracy and completeness of the information, it may not reflect the most current legal or regulatory changes. Taxpayers are advised to consult with a qualified tax professional or you may contact to our tax advisor team through call +91-9871990777 or the appropriate government authority to verify the accuracy of the information and to obtain advice on their specific tax situations.


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