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An overview of amendments in Corporate Social Responsibility Section 135 of the Companies Act,2020

1.What is CSR?

As per section 135 of the Companies Act, 2013 certain class of companies must constitute CSR Committee for formulation and implementation of CSR Policy, having:

  1. Net worth of Rs.500 Crore or more or

(b) Turnover of Rs.1000 Crore or more or

(c) Net profit of Rs.5 Crore more.

If a company crosses the above limits in respect of net worth or turnover

or net profit during the immediately preceding financial year, such company

has to constitute a CSR committee.

CSR Committee shall constitute of three or more directors out of which at least one director shall be independent director.

*Provided that where a company is not required to appoint an independent director under sub section 4 of Section 149, it shall have in its CSR Committee; two or more directors; (Inserted by Companies Amendment Act, 2017 w.e.f. 19th September 2018)

- The company shall spend in every financial year, at least two percent of the

average net profits of the company made during the 3 immediately preceding

financial years, in pursuance of its CSR Policy.

- The Committee formulates a CSR Policy and recommend to the Board which

shall indicate the activities to be undertaken by company in areas or subject

specified in Schedule VII.

Activities covered under Schedule VII :

  1. Ending hunger and poverty

  2. Promoting public health

  3. Supporting education

  4. Addressing gender inequality and empowering women

  5. Funding cultural activities and arts

  6. Social business projects measures for the benefit of armed forces veterans, war widows and their dependents, Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows.

  7. training to promote rural sports, nationally recognized sports, Paralympic sports and Olympic sports;

  8. Contribution to Prime Minister’s National Relief Fund or Prime Minister’s Citizen Assistance And Relief in Emergency Situation Funds (PM CARES Fund)

  9. (a) Contribution to incubators or research and development projects in

the field of science, technology, engineering and medicine, funded by the

Central Government or State Government or Public Sector Undertaking

or any agency of the Central Government or State Government; and

(b) Contributions to public funded Universities; Indian Institute of

Technology ; National Laboratories and autonomous bodies

established under Department of Atomic Energy (DAE); Department of

Biotechnology (DBT); Department of Science and Technology (DST);

Department of Pharmaceuticals;AYUSH; Ministry of

Electronics and Information Technology and other bodies, namely

DRDO; Indian Council of Agricultural Research (ICAR); Indian Council of Medical

Research (ICMR) and Council of Scientific and Industrial Research

(CSIR), engaged in conducting research in science, technology,

engineering and medicine aimed at promoting Sustainable Development

Goals clause ix substituted w.e.f. 24.08.2020)

  1. Slum area development

  2. Such other matters as may be prescribed.

Activities not covered under Schedule VII :

  1. Activities undertaken by the company in the normal course of business.

  2. The CSR projects or programs or activities that benefits only the employees of

the company and their families.

  1. One-off events such as marathons/ awards/ charitable contribution/ advertisement.

  2. Expenses incurred by companies for the fulfillment of any other Act/Statute of

regulations (such as Labour Laws, Land Acquisition Act, 2013, Apprentice

Act,1961 etc.)

  1. Contribution to any political party.

  2. The project or programme or activities undertaken outside India.


Corporate Social Responsibility was notified on 01/04/2014, as a statutory obligation for all the companies by enacting the Companies Act, 2013.

These amendments have resulted in some significant changes in the CSR provisions to provide a framework for implementation of the Companies (Amendment) Act 2019 and 2020.

The Ministry of Corporate Affairs of India notified Companies (Corporate Social Responsibility) Amendments Rules 2021. The effective date of Rule- On the date of publication of the aforesaid notification in the Official Gazette i.e. 22.01.2021

Measures taken regarding COVID-19

On 23rd March 2020 MCA, in response to COVID-19 Pandemic, clarified through issuing a circular that spending of CSR funds relating to COVID-19 would be considered as eligible CSR expenditure as per the Companies Act,2013. The funds may be spend by companies for various activities relating to COVID-19 under items i. to ix. of Schedule VII relating to the promotion of healthcare, preventive healthcare and sanitation. Further amendments were made by MCA to support the COVID-19 vaccine development programme.

What is NEW now?

The amendment has notified that any company engaged in research and development activity of new vaccine, drugs and medical devices in their normal course of business may undertake research and development activity of new vaccine, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22 and 2022-23 subject to the prescribed condition :

  • Such R&D activities must be carried out in collaboration with any of the institutes eg. the Indian Council of Medical Research, the Council of Scientific and Industrial Research, the Department of Biotechnology and the Department of Science and Technology (DST), CSIR, ICAR,.

  • Details must be disclosed in annual report on CSR included in board’s report.

Thereafter, under Rule 6(1) of CSR (Corporate Social Responsibility Policy) Rules, 2014, first proviso has been omitted which states that the CSR activities does not include the activities undertaken in the pursuance of normal course of business of a company. Similarly, under Rule 4(1) “excluding activities undertaken in pursuance of its normal course of business” has been also omitted.

Increase in the scope of CSR activities

Notification dated August 24, 2020 has widened the scope of CSR Activities by amending item (ix) of the Schedule VII of the Companies Act 2013 to include more entities like Ministry of AYUSH etc., engaged in the research and development to whom contribution shall be treated as Contribution for Corporate Social Responsibility Activities as required under Section 135 of Companies Act, 2013.

CSR Implementation (Rule-4)

The Board shall ensure that the activities of CSR activities are performed by the Company itself or through-

A . Registered Trust established by the Company solely or along with any other Company.

B . Registered Society that has been established by the Central Government or State Government.

C . Any institution/entity that is registered as per the act of Parliament or State Legislature.

D . A company established under Registered Trust, Section 8 Company, Registered Society.

Whether contribution made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’ shall qualify as CSR expenditure?

Chief Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19’ is not included in Schedule VII of the Companies Act, 2013 and therefore any contribution to such funds shall not qualify as admissible CSR expenditure.

Display of CSR Activities on its website (RULE-9)

The Board of Directors shall mandatorily disclose the CSR composition, CSR Policy and projects approved by the Board on their website which is accessible by public.


1. ebook.mca, Corporate Social Responsibility

2. Module-1,ICSI ,Company Law Executive Programme

3.Vikram Singh Sirohi, Note on Companies (CSR) Amendments Rules, 2021,

Aakriti Parashar

Government State Level Law College,Bhopal

2nd Year III Semester

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