Companies CSR Amendment rules 2021, CSR amendment rules 2021, FAQs on CSR, CSR under companies act 2013, CSR amendment, Ebizfiling

All you need to know on Companies CSR Amendment Rules 2021 notified by MCA

A guide on Companies CSR Amendment Rules 2021 modified by MCA (Ministry of Corporate Affairs)


In the current financial year, every company that meets the requirements of Section 135 of the Companies Act, 2013 (‘Act’) must devote at least 2% of its average net income over the previous three financial years to Corporate Social Responsibility (CSR). The Companies CSR Amendment Rules 2021 are discussed in this article.


Companies will be required to spend money on CSR in accordance with the Act and the CSR Policy Rules. The Companies (CSR Policy) Amendment Rules, 2021 (‘Rules’) were notified by the Ministry of Corporate Affairs (MCA) on January 22, 2021. Before going through the changes in the CSR Policy, let’s have a quick look at the concept of Companies CSR (Corporate Social Responsibility).

Concept of Companies CSR (Corporate Social Responsibility)

The phrase “corporate social responsibility,” or “CSR,” refers to a self-regulatory business model that helps a firm become socially accountable to its stakeholders and the broader public. The fundamental goal of CSR policy implementation was to make businesses responsible for improving the environment and society rather than contributing negatively to them.


Furthermore, firms’ CSR efforts are governed by section 135 of the Companies Act 2013. It is also important to note that the provisions of CSR are based on the internationally recognised idea of COREX. Comply or Explain is the meaning of the phrase COREX.

Companies CSR Amendment rules 2021

  • Amendment in CSR Activities

CSR refers to the activities that a corporation engages in in order to fulfil the statutory responsibility set forth in Section 135 of the Act and the Rules, but does not include the following:

  • Activities that are carried out as part of the normal course of business. However, in the normal course of business, a company engaged in the development and research of new drugs, vaccines, and medical devices can undertake the development and research of a new drug, vaccine, or medical device relating to COVID-19 for the fiscal years 2020-21, 2021-22, and 2022-23, if:

    1. The corporation must collaborate with any of the organisations or institutes listed in Schedule VII item (XI) of the Act to conduct such development and research.

    2. The corporation must separately disclose the facts of the action in its annual report on CSR, which is included in the Board of Directors’ report.

  • Except for training of Indian sports personnel representing India at the international level or Union or State territory at the national level, activities carried out by a corporation outside India are prohibited.

  • Under section 182 of the Act, any amount may be given to a political party, either indirectly or directly.

  • Activities listed in Section 2(k) of the 2019 Wage Code that benefit the company’s employees.

  • Sponsored activities are those that a company backs in order to get exposure for its services or products.

  • These activities also fulfil other statutory criteria under any law in force in India.

Amendment in Ongoing Project Definition

Ongoing Projects include projects that were not approved as multi-year projects at the outset but whose duration has been extended beyond one year by the board based on reasonable justification, and projects that were not approved as multi-year projects at the outset but whose duration has been extended beyond one year by the board based on reasonable justification.


According to the definition, an ongoing project is one that has already begun and is a multi-year project that lasts for at least one year but not more than three years.

CSR (Corporate Social Responsibility) Policy 

CSR policy is a statement that covers the execution and monitoring of activities, guiding principles for selection, and formation of the yearly action plan, and is issued by the company’s board of directors after considering the suggestions of its CSR (Corporate Social Responsibility) committee.

Amendments in the definition of Administrative overheads

Administrative overheads refer to the costs incurred by the company for the ‘general management and administration of the company’s Corporate Social Responsibility functions but do not include costs incurred directly for the design, implementation, monitoring, and evaluation of a specific Corporate Social Responsibility project or program.

Changes to the Transfer of Unspent CSR Funds

The corporation should transfer any unspent CSR funds to any fund listed in Schedule VII of the Act until a fund is identified in Schedule VII in accordance with Sections 135(5) and 135(6) of the Act.

  • Amendments to the CSR Implementation Act

The Board should ensure that the company’s CSR efforts are carried out either directly or through:

  • Companies registered under society or registered public trust formed under Sections 12A and 80G of the Income Tax Act, 1961, or formed under Section 8 of the Act.

  • Companies formed under Section 8 of the Act, as well as registered societies and registered trusts formed by the federal or state governments.

  • Entity created by a law passed by the legislature of a state or by a law passed by Parliament.

  • Companies that have at least three years of experience in similar activities and are formed under Section 8 of the Act, or are a registered public society or registered trust under Sections 12A and 80G of the Income Tax Act, 1961.

The entities are required to sign and submit Form CSR-1 electronically. It should be digitally verified by a Company Secretary, Chartered Accountant, or Cost Accountant.


The system will produce a unique CSR Registration Number after you complete Form CSR-1 on the MCA (Ministry of Corporate Affairs) portal. A firm can hire foreign organizations to plan, monitor, and evaluate CSR programs and projects in accordance with its CSR policy, as well as to train its employees in CSR (Corporate Social Responsibility).


A corporation’s Board of Directors should guarantee that the funds disbursed are used for the purposes and in the manner that they have authorised. This should be certified by the Chief Financial Officer or the person in charge of financial management.


If a project is ongoing, the Board should monitor how well it is being carried out according to the approved schedules and year-by-year budgeting. It has the ability to make any necessary changes to guarantee that the project is completed on time.


The CSR Committee shall recommend and produce an annual action plan to the Board in compliance with its CSR policy, which should include the following:

  1. Reporting and monitoring mechanism for projects or programmes.

  2. The way in which the CSR programmes or projects outlined in these Rules are implemented.

  3. List of CSR programmes or initiatives that have been approved for implementation in the Act’s Schedule VII themes or regions.

  4. Details on the company’s projects, including their scope and impact, as well as any need evaluations.

  5. Modalities of the project or programme implementation timetables and funding utilization.

  • Amendments to CSR Reporting

An annual report on CSR should be included in the Board report covered by the Rules for each financial year, with the details provided in Annexure I or Annexure II, as applicable.


In the event of a foreign firm, the annual report on CSR prepared under section 381(1)(b) of the Act should include the information stated in Annexure I or Annexure II, as appropriate.


Every company with a CSR obligation of Rs.10 crore or more should conduct an impact assessment through an independent agency for CSR projects with a budget of Rs.1 crore or more that are completed within a year of the impact studies completion.


The impact assessment reports should be provided to the Board of Directors and included in the CSR report for the year. A corporation conducting an impact assessment can register CSR expenditure for that financial year, but it must not exceed 5% of overall CSR expenditure for that financial year or Rs.50 lakh, whichever is less.

  • Amendments in CSR Expenditure

A corporation’s Board of Directors must ensure that administrative costs do not exceed 5% of its overall CSR expenditure for the fiscal year.The surplus generated by CSR activities will not be included in a company’s business earnings and will be transferred to the Unspent CSR Account or reinvested in the same project.


Within six months of the financial year’s end, the corporation should spend any remaining CSR funds in accordance with its annual action plan, CSR policy, or transfer them to a Fund described in Schedule VII.


If a corporation spends more than the sum specified in Section 135(5) of the Act, the excess can be deducted over the next three fiscal years. The surplus deriving from CSR operations in accordance with these Rules, however, should not be included in the excess amount available for set-off, and the Board should make a resolution to that effect.


A corporation can use the CSR money to buy or build a capital asset that it already owns.

  • Companies established under section 8 of the Act, or a Registered Society or Registered Public Trust with philanthropic purposes and a CSR Registration Number.

  • Beneficiaries of the CSR project, in the form of collectives, self-help groups, and entities

  • Governmental authority

FAQs on Companies CSR Amendment Rules 2021

1. Is it possible to do the impact assessment through an international organisation?

Yes. An impartial agency must conduct the impact assessment study, and there is no rule against the appointment of an international organisation.

2. Are the Amendment Rules for Companies (CSR Policy) for 2021 retroactive?

The amendments are often not retroactive. However, this does not rule out the possibility that the revisions will have an impact on subjects or activities in FY 20-21. Any budget gap in FY 2020-21, for example, might be filled by the modifications. Furthermore, there is a strong belief that impact assessments may be required even for CSR projects completed in previous years.

3. What is the maximum amount of money that can be spent on ‘Impact Assessment’?

A company conducting an impact assessment may register corporate social responsibility spending for that financial year that does not exceed 5% of overall CSR expenditure for that financial year or fifty lakh rupees, whichever is less.

4. When will a project that is already underway be deemed completed?

When concrete actions are taken toward completing a project, it is regarded to have begun. When a firm has made a legally enforceable commitment to a project, however, spending on it is not required.

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Author: zarana-mehta

Zarana Mehta is an MBA in Finance from Gujarat Technology University. Though having a masters degree in Business Administration, her upbeat and optimistic approach for changes led her to pursue her passion i.e. Creative writing. She is currently working as Content Writer at Ebizfiling.

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