flowchart LR
A["CSR Reporting <br> Architecture"] --> B["Section 134(3)(o) <br> Board's Report"]
A --> C[Section 135 <br> Mandatory CSR]
A --> D[CSR Rules, 2014]
A --> E["SEBI BRSR <br> (Listed Companies)"]
D --> D1[Rule 4: Implementing Agency]
D --> D2["Rule 7: Funding & Capital Assets"]
D --> D3["Rule 8: Annual Report & Impact Assessment"]
D --> D4[Rule 9: Website Disclosure]
D --> D5[Form CSR-1: Agency Registration]
D --> D6[Form CSR-2: MCA Filing]
%% Style
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class A,B,C,D,D1,D2,D3,D4,D5,D6,E dark;
5 Reporting and Various Activities under CSR
ImportantLearning Objectives
By the end of this chapter, the reader will be able to:
- Identify the principal sources of the reporting obligations imposed on Indian companies in respect of corporate social responsibility, including Section 134(3)(o) and Section 135 of the Companies Act, 2013, the Companies (Corporate Social Responsibility Policy) Rules, 2014, and the SEBI Business Responsibility and Sustainability Reporting framework.
- Apply the prescribed format of the annual report on CSR to a company subject to Section 135, including the disclosure of CSR policy, committee composition, average net profit computation, total expenditure, amount unspent, and any failure to spend.
- Distinguish the principal modes of CSR implementation, including direct implementation, implementation through a registered implementing agency under Form CSR-1, and collaborative implementation with other companies.
- Classify a proposed activity as eligible or ineligible under Schedule VII and Rule 2(1)(d) of the CSR Rules, 2014, and identify the activities that the rules expressly exclude from the scope of CSR.
- Evaluate the substantive expectations of the impact assessment requirement under Rule 8(3) and the integration of CSR reporting with the broader business responsibility and sustainability framework introduced by SEBI in 2021.
5.1 Introduction
Chapter 4 set out the conceptual and statutory foundation of corporate social responsibility in India: the theoretical lineage, the applicability thresholds of Section 135, the two per cent spending obligation, the role of the CSR committee, and the general scope of Schedule VII. This chapter takes up the operational dimensions of CSR. How is the spending obligation discharged in practice? Through whom is the work done? What must the company disclose, in what form, and to whom? When does a proposed activity qualify as CSR, and when does it not? How does the company-level CSR report fit within the broader sustainability disclosure architecture that Indian listed companies must now satisfy?
The operational rules are contained principally in the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended in 2021 and subsequently. The 2021 amendment was the most consequential operational reform of the regime since its introduction. It introduced a registration requirement for implementing agencies through Form CSR-1, an impact assessment requirement for larger CSR obligations, an administrative-overhead cap, a regime for the treatment of surpluses arising from CSR projects, and a mechanism for the carry-forward and set-off of excess spending. Each of these reforms responded to a specific weakness in the earlier framework, and each has reshaped the practice of CSR in Indian companies.
For the listed segment, the CSR architecture is now layered with the SEBI Business Responsibility and Sustainability Reporting (BRSR) framework, applicable from financial year 2022–23 to the top one thousand listed entities by market capitalisation. The BRSR translates the National Guidelines on Responsible Business Conduct into a structured disclosure framework spanning environmental, social, and governance dimensions. CSR reporting under Section 135 and BRSR reporting under SEBI together constitute the operational disclosure architecture of corporate social activity in India.
5.2 The CSR Reporting Architecture
The reporting obligations of a company subject to Section 135 are anchored in three statutory loci: the board’s report under Section 134, the prescribed format of the annual CSR report under the CSR Rules, 2014, and the website disclosure requirement under Rule 9. Listed companies are additionally subject to the SEBI BRSR framework.
5.2.1 Section 134(3)(o): The Board’s Report
Section 134(3) of the Companies Act, 2013 enumerates the matters that must be included in the board’s report attached to every company’s financial statements. Clause (o) of that sub-section requires the report to include:
NoteSection 134(3)(o), Companies Act, 2013
“The details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year.”
The provision is the parent statutory anchor of CSR disclosure. It places the obligation on the board itself, treats the disclosure as part of the audited annual reporting cycle, and integrates CSR into the broader narrative of the company’s stewardship for the financial year.
The detail required by Section 134(3)(o) is given specific form by Rule 8 of the CSR Rules, 2014, which prescribes the annual report on CSR.
5.2.2 Rule 8 of the CSR Rules: The Annual CSR Report
Rule 8 requires every company subject to Section 135 to include, as an annexure to its board’s report, a CSR report in the prescribed format. The format has been revised in line with the 2021 amendments and now requires substantially fuller disclosure than the earlier version.
NoteAnnexure II to the CSR Rules: Format of the Annual CSR Report
The prescribed annexure requires disclosure of, among other matters:
a brief outline of the company’s CSR policy, including the overview of projects or programmes proposed to be undertaken;
the composition of the CSR committee, with the names of members and their attendance at meetings;
the web-links at which the CSR policy, the projects approved by the board, and the report are placed;
the impact assessment of CSR projects carried out, where applicable;
the average net profit of the company for the three preceding financial years computed under Section 198;
the prescribed CSR obligation for the year, that is, two per cent of the average net profit;
the total amount spent on CSR for the financial year;
the amount of unspent CSR for the year, with separate sub-totals for amounts allocated to ongoing projects and other unspent amounts;
the details of the CSR amount transferred to the Unspent CSR Account in respect of ongoing projects, and to a Schedule VII fund in respect of unallocated amounts;
the details of the CSR amount spent for the financial year, with project-wise particulars;
the details of the implementing agency or agencies, with their CSR-1 registration numbers; and
where the company has failed to spend the prescribed amount, the reasons for the failure.
The level of detail required by the format has the effect of making the CSR report a self-contained document of substantial length and information density, accessible to investors, regulators, civil society, and academic researchers.
5.2.3 Rule 9: Website Disclosure
Rule 9 of the CSR Rules requires every company subject to Section 135 to disclose, on its website, the composition of the CSR committee, the CSR policy, and the projects approved by the board. The website disclosure operates alongside the annual report disclosure and is intended to provide year-round transparency to interested stakeholders, including potential beneficiaries, civil society organisations, and academic researchers, who may not have ready access to the annual report.
5.2.4 Form CSR-2: Filing with the Ministry of Corporate Affairs
Form CSR-2, introduced by the Ministry of Corporate Affairs in 2022, requires every company subject to Section 135 to file a return on its CSR activities with the Registrar of Companies. The form is filed annually as an addendum to the company’s annual return and provides a centralised database of CSR activity that facilitates regulatory oversight and policy research.
5.3 Eligible and Ineligible CSR Activities
The eligibility of a particular activity as CSR depends on two parallel tests. The activity must fall within one of the categories in Schedule VII to the Act, and it must not fall within the categories of activity excluded from CSR by Rule 2(1)(d) of the CSR Rules, 2014.
5.3.1 The Schedule VII Categories Reconsidered
Chapter 4 set out the principal categories of activity permitted under Schedule VII. In practice, the application of the schedule has been refined by clarifications, frequently asked questions, and notifications issued by the Ministry of Corporate Affairs. Three points of operational refinement merit emphasis here.
First, the description of each Schedule VII category is to be construed broadly. The scheme of the schedule is not to enumerate specific activities but to define broad categories within which the company may design programmes appropriate to its context.
Second, the schedule has been expanded several times since 2014. Notable expansions include the addition of contributions to incubators and to public-funded research institutions in 2019, the inclusion of contributions to PM CARES in 2020, and the further integration of disaster management and pandemic response activities in subsequent years.
Third, certain Schedule VII categories have detailed sub-rules. Education-related expenditure under Schedule VII(ii), for example, is subject to interpretive guidance that distinguishes general educational support from contributions to identified individuals; environmental sustainability expenditure under Schedule VII(iv) is subject to guidance on what counts as carbon offset, renewable energy, and biodiversity conservation.
5.3.2 Activities Excluded from CSR (Rule 2(1)(d))
Rule 2(1)(d) of the CSR Rules, 2014 expressly excludes certain activities from the scope of CSR. The exclusions are designed to preserve the integrity of the regime by preventing companies from re-labelling ordinary business expenditure or restricted forms of expenditure as CSR.
NoteRule 2(1)(d): Activities Excluded from CSR
The rule excludes from the scope of CSR:
activities undertaken in pursuance of the normal course of business of the company, except for research and development directly related to the fight against COVID-19 and similar exceptions notified from time to time;
activities undertaken outside India, except for training of Indian sports personnel representing any state or union territory at national level or India at international level;
any contribution to any political party directly or indirectly under Section 182 of the Companies Act, 2013;
activities benefiting only the employees of the company and their families, treated for this purpose as activities not constituting CSR;
activities supported by the company on a sponsorship basis for deriving marketing benefits for its products or services;
activities carried out for the fulfilment of any other statutory obligation under any law in force in India.
WarningThe Exclusion of Sponsorship-for-Marketing Is Frequently Misunderstood
A common error in CSR practice is the confusion of social-impact sponsorship with marketing-driven sponsorship. A company that sponsors a healthcare camp at which it distributes pamphlets advertising its products is sponsoring on a marketing basis, and the expenditure is not eligible CSR. A company that sponsors the same healthcare camp without any commercial advertising or branding is sponsoring on a charitable basis, and the expenditure is, subject to the other rules, eligible CSR. The distinguishing question is whether the company derives a marketing benefit from the activity beyond the goodwill that ordinarily attaches to corporate giving.
WarningActivities Outside India Are Largely Excluded
A multinational Indian company that wishes to deploy its CSR resources in support of programmes outside India will encounter the geographic exclusion in Rule 2(1)(d)(ii). The exclusion is narrowly worded and admits only the limited exception relating to training of Indian sports personnel. CSR is, in this respect, a domestic policy instrument: India’s tax-foregone investment in social activity is to be recovered as Indian social outcomes.
5.4 Modes of CSR Implementation
A company may discharge its CSR obligation through any of three principal modes of implementation, identified in Rule 4 of the CSR Rules, 2014. The choice of mode has consequences for governance, accountability, scale, and cost.
5.4.1 Direct Implementation
The company may itself undertake the CSR activity, deploying its own staff and infrastructure. Direct implementation is most common where the activity is closely aligned with the company’s core competencies and operating geographies, and where the company can leverage its distinctive resources.
For example, Infosys Limited’s foundational programmes in computer literacy in rural schools were initially implemented directly through the Infosys Foundation and through the deployment of Infosys engineers as volunteer trainers. The alignment between the company’s core competence and the social activity made direct implementation efficient and credible.
5.4.2 Implementation Through a Registered Implementing Agency
The company may deploy its CSR resources through a separately incorporated entity registered with the Ministry of Corporate Affairs as an implementing agency. The 2021 amendment to the CSR Rules introduced, with effect from 1 April 2021, the requirement that every implementing agency obtain registration in Form CSR-1.
NoteForm CSR-1: Registration of Implementing Agencies
An entity that proposes to undertake CSR activity on behalf of any company must, since 1 April 2021, obtain registration with the Ministry of Corporate Affairs by filing Form CSR-1. The form must be electronically signed by the implementing entity, verified by a chartered accountant, company secretary, or cost accountant in practice, and accompanied by the entity’s incorporation documents and a statement of its track record.
Eligible implementing entities include:
a company established under Section 8 of the Companies Act, 2013, or a registered public trust, or a registered society, established by the company itself either singly or together with any other company, with a CSR object;
a Section 8 company, registered public trust, or registered society established by the central government or state government;
any entity established under an Act of Parliament or a state legislature; or
any other Section 8 company, registered public trust, or registered society having an established track record of at least three years in undertaking similar activities.
The CSR-1 registration regime brought into the formal compliance net thousands of charitable entities that had previously implemented CSR programmes without any direct registration.
The Tata Trusts, the Reliance Foundation, the Infosys Foundation, the Wipro Foundation, and the Aditya Birla Centre for Community Initiatives and Rural Development are all registered as Section 8 companies or as charitable trusts and serve as the principal implementing agencies for the CSR programmes of their respective groups. Mid-sized companies typically engage one or more independent implementing agencies registered under CSR-1.
5.4.3 Collaborative Implementation
Two or more companies may collaborate on a CSR project, in which case each company is required to report its share of the contribution and the project. Collaborative implementation is particularly useful for large-scale programmes that benefit from the combined resources of multiple corporate participants, such as community-level water security programmes, regional skill development missions, or sectoral health initiatives.
5.4.4 A Note on the Three-Year Track Record Requirement
The three-year track record requirement for independent implementing agencies under Rule 4(1)(d) is intended to filter out newly formed entities lacking demonstrated capability. The requirement does not, however, apply to entities established by the company itself or by the government, which may serve as implementing agencies from inception. The asymmetry reflects a regulatory judgment that group-affiliated and government-affiliated entities have a clearer line of accountability than third-party entities.
5.5 Funding, Capital Assets, and Set-Off
The 2021 amendment to the CSR Rules introduced detailed operational provisions on funding, the treatment of capital assets created out of CSR funds, the treatment of surplus generated from CSR activity, and the carry-forward and set-off of excess spending.
5.5.1 Administrative Overhead
Rule 7(1) caps the administrative overhead expenses charged to the CSR account at five per cent of the total CSR expenditure for the financial year. The cap is intended to ensure that the great majority of CSR resources are deployed on the substantive social activity rather than on the administrative apparatus that surrounds it. Salaries of CSR-dedicated staff, office costs of the CSR function, and similar expenses fall within the cap; project implementation costs do not.
5.5.2 Capital Assets Created Out of CSR Funds
Rule 7(4) provides that any capital asset created or acquired with CSR funds must be held by:
a Section 8 company, registered public trust, or registered society having a CSR object and registered under CSR-1;
the beneficiaries of the project, in the form of self-help groups, collectives, or entities; or
a public authority.
The rule prevents the company from retaining beneficial ownership of capital assets created with CSR funds, which would otherwise allow the company to convert CSR expenditure into a private capital asset. The asset must vest in the implementing entity, the beneficiaries, or a public authority.
5.5.3 Surplus Arising from CSR Activity
Rule 7(2) provides that any surplus arising out of the CSR activities does not form part of the business profit of the company. The surplus must either be ploughed back into the same CSR project or transferred to the Unspent CSR Account and then to a Schedule VII fund. The rule prevents the company from generating profits from its CSR activity and reabsorbing them as ordinary business income.
5.5.4 Set-Off of Excess CSR Spending
Rule 7(3) introduces, for the first time in Indian CSR law, a regime for the set-off of excess spending. Where a company spends an amount in excess of the prescribed two per cent in any financial year, it may set off the excess against the obligation of any of the immediately succeeding three financial years, subject to a board resolution to that effect. The set-off provision corrects a perverse incentive in the original framework, in which a company that over-spent in one year could not recover the excess in any subsequent year and was effectively penalised for early or anticipatory action.
TipThe Set-Off Regime Rewards Long-Range CSR Planning
The set-off regime makes it possible to plan CSR expenditure across a multi-year horizon rather than calendar-year by calendar-year. A company embarking on a multi-year community programme can front-load expenditure where the underlying activity requires it, recover the excess against subsequent obligations, and avoid the artificial smoothing that the earlier rules would have required. The set-off provision is therefore particularly important for long-cycle programmes in education, healthcare, and infrastructure.
5.6 Impact Assessment
Rule 8(3) of the CSR Rules, 2014 introduced, with effect from financial year 2020–21, a mandatory impact assessment requirement for larger CSR obligations.
NoteRule 8(3): Mandatory Impact Assessment
Every company having an average CSR obligation of ₹10 crore or more in the three immediately preceding financial years must undertake an impact assessment, through an independent agency, of CSR projects having outlay of ₹1 crore or more, that have been completed not less than one year before undertaking the impact assessment.
The cost of the impact assessment may be charged to the CSR account, subject to a cap of two per cent of the total CSR expenditure for the financial year, or fifty lakh rupees, whichever is higher.
The impact assessment is a substantive evaluation of the social outcomes of the CSR project, distinct from the financial audit of the expenditure. It typically involves a baseline-and-endline study, qualitative interviews with beneficiaries, and a comparative assessment against the project’s stated objectives. The impact assessment report is required to be placed before the CSR committee, the board, and disclosed in the annual CSR report.
WarningImpact Assessment Is Not the Same as Financial Audit
A persistent confusion in early-stage compliance is the conflation of the impact assessment under Rule 8(3) with the financial audit of CSR expenditure. The two are distinct. The financial audit verifies that the resources were spent on the activities and through the agencies disclosed in the annual report. The impact assessment evaluates whether the activities produced the social outcomes that justified the expenditure. A CSR programme can pass a financial audit and fail an impact assessment.
5.7 CSR Reporting and the Wider Sustainability Architecture
For listed Indian companies, CSR reporting under Section 135 is now embedded in a wider sustainability disclosure architecture introduced by the Securities and Exchange Board of India in 2021. The Business Responsibility and Sustainability Reporting (BRSR) framework replaces the earlier Business Responsibility Report (BRR) and applies, on a mandatory basis, to the top one thousand listed entities by market capitalisation, with effect from financial year 2022–23. From financial year 2024–25, a subset of disclosures, the BRSR Core, must be assured by an independent assurance provider.
5.7.1 The Nine NGRBC Principles
The BRSR is structured around the nine principles of the National Guidelines on Responsible Business Conduct (NGRBC), issued by the Ministry of Corporate Affairs.
NoteThe Nine Principles of the NGRBC
| Principle | Subject |
|---|---|
| 1 | Businesses should conduct and govern themselves with integrity, in a manner that is ethical, transparent, and accountable |
| 2 | Businesses should provide goods and services in a manner that is sustainable and safe |
| 3 | Businesses should respect and promote the well-being of all employees, including those in their value chains |
| 4 | Businesses should respect the interests of and be responsive to all their stakeholders |
| 5 | Businesses should respect and promote human rights |
| 6 | Businesses should respect and make efforts to protect and restore the environment |
| 7 | Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent |
| 8 | Businesses should promote inclusive growth and equitable development |
| 9 | Businesses should engage with and provide value to their consumers in a responsible manner |
The BRSR translates these principles into a structured set of essential and leadership disclosures, with quantitative metrics on emissions, energy, water, waste, employee welfare, gender, occupational safety, training, community development, consumer complaints, and a range of other indicators.
5.7.2 CSR Within BRSR
CSR expenditure under Section 135 is reported within the BRSR as part of the disclosure under Principle 8. The BRSR therefore both subsumes the CSR report and extends its reach to a much wider range of social and environmental dimensions. A listed Indian company subject to both Section 135 and the BRSR mandate must therefore prepare two integrated reports: the CSR report under the Companies Act, and the BRSR under the SEBI regulations. In practice, leading listed companies present a single integrated annual report that satisfies both requirements.
TipIntegrated Reporting Is the Direction of Travel
The trajectory of disclosure regulation in India and globally is towards integrated reporting, in which the financial, social, and environmental performance of the company is presented as a single coherent narrative rather than as parallel disclosures. The International Sustainability Standards Board (ISSB) is in the process of issuing global sustainability disclosure standards that are likely to inform Indian regulation in coming years. Companies that have invested in integrated CSR and BRSR reporting from the outset are positioned to align with this direction without significant additional disclosure burden.
5.8 Categories of CSR Activity in Practice
The pattern of Indian CSR expenditure across the Schedule VII categories has been broadly stable since the regime’s introduction in 2014. The largest single category is education, accounting for approximately one-third of total CSR expenditure in most years; healthcare and sanitation form the second-largest category, at approximately a quarter; rural development, environmental sustainability, and disaster management together account for approximately a further fifth; with the remaining categories sharing the balance.
5.8.1 Education
Education-related CSR expenditure includes school infrastructure, scholarships, teacher training, vocational education, and special education for the differently abled. The scale of corporate involvement in education in India is now substantial, with major companies operating school-adoption programmes, scholarship endowments, and skill-development initiatives. The Tata Trusts have been pioneers in this space; the Wipro Foundation’s work in school education has continued for over two decades; the Bharti Foundation operates the Satya Bharti Schools; the Reliance Foundation runs the Dhirubhai Ambani International School and the Reliance Scholarship programmes.
5.8.2 Healthcare and Sanitation
Healthcare CSR includes the support of hospitals and clinics, the funding of disease-specific programmes for HIV, malaria, tuberculosis, and other public health priorities, the provision of mobile medical units in underserved areas, and the support of mental health and adolescent health initiatives. The Tata Memorial Hospital, founded in 1941 and now a leading cancer treatment and research centre, illustrates the long-term impact of CSR investment in healthcare. Sanitation-related CSR has expanded substantially since 2014, in alignment with the Swachh Bharat mission.
5.8.3 Rural Development and Livelihood
Rural development CSR includes village adoption programmes, drinking water and irrigation infrastructure, rural electrification through renewable sources, agricultural modernisation, and livelihood-creation programmes. ITC Limited’s Mission Sunehra Kal, launched in 2010 and integrated into ITC’s CSR programme since 2014, illustrates the scale that integrated rural development can achieve, with reach across more than fourteen states and several million beneficiaries.
5.8.4 Environmental Sustainability
Environmental sustainability CSR includes afforestation, biodiversity conservation, renewable energy installation in beneficiary communities, water resource management, and waste management initiatives. Mahindra Group’s Hariyali programme, which has planted more than twenty million trees since its launch in 2007, predates Section 135 and has continued under the formal CSR mandate.
5.8.5 Disaster Management
Disaster management CSR has expanded substantially since the 2018 Kerala floods, the 2019 cyclones in the eastern coast, and the COVID-19 pandemic. Section 135 expenditure on disaster relief has grown into one of the most significant single channels of corporate philanthropic response to natural and public health emergencies in India.
5.8.6 Other Categories
The remaining Schedule VII categories, including national heritage, sports, armed forces veterans, senior citizens, and contributions to incubators and research, account for a smaller share of overall CSR expenditure but are significant for particular sectors and regions. Contributions to research and incubators in particular have grown since their addition to Schedule VII in 2019.
5.9 Case Studies
5.9.1 Case Study 1: ITC’s Mission Sunehra Kal and Integrated Rural Development
ITC Limited’s CSR programme is anchored in Mission Sunehra Kal, a multi-stranded rural development initiative that operates across watershed development, social and farm forestry, sustainable agriculture, education, women’s empowerment, livestock development, and waste management. The programme reaches more than ten thousand villages across multiple states and integrates with ITC’s agricultural value chains, including the e-Choupal information network. By financial year 2023–24, ITC’s CSR expenditure had crossed ₹400 crore annually, deployed substantially through the ITC-affiliated implementing entity and a network of grassroots partners.
The Mission Sunehra Kal model exemplifies several features identified earlier in this chapter. The programme is delivered substantially through a registered implementing agency. The activities are aligned with ITC’s core agricultural and rural-facing operations, generating mutual reinforcement between the company’s commercial and social activities. The programme is subject to impact assessment under Rule 8(3) and reports against measurable outcome indicators including hectares of land brought under sustainable agriculture, students supported through the school programmes, and women enrolled in livelihood-creation cohorts.
Discussion Questions
- To what extent does the integration of CSR with the company’s core agricultural value chain raise the question of whether the activity falls within the “normal course of business” exclusion under Rule 2(1)(d)?
- How should the regulator distinguish between an integrated CSR programme that legitimately leverages corporate resources and a programme that improperly subsidises the company’s commercial operations?
- What does the longevity of Mission Sunehra Kal suggest about the design features of CSR programmes that endure?
5.9.2 Case Study 2: Reliance Foundation and the Architecture of a Modern CSR Implementation Agency
Reliance Foundation, the principal CSR implementing agency of the Reliance Industries group, was established in 2010 as a Section 8 company. The Foundation operates programmes across rural transformation, health, education, urban renewal, sports for development, arts, culture, and disaster response, with annual programme expenditure crossing ₹1,000 crore in recent years. It runs the Drishti programme for the visually impaired, the Dhirubhai Ambani Scholarship programme, several major hospitals through Sir H.N. Reliance Foundation Hospital, and a network of village-level partnerships across rural India.
The Reliance Foundation illustrates the architecture of a modern Indian CSR implementing agency. It is registered under Form CSR-1. It maintains separate financial accounts for each implementing programme. It commissions impact assessments through independent agencies for projects above the Rule 8(3) threshold. It publishes detailed annual reports that supplement the CSR disclosures of the Reliance group companies. It collaborates with the central and state governments, with multilateral agencies, and with other corporate foundations on programmes of joint reach.
Discussion Questions
- What governance and accountability advantages does a separately incorporated implementing agency confer over direct implementation by the operating company?
- Should the regulatory framework distinguish between implementing agencies established by the company itself and independent third-party implementing agencies in terms of disclosure and oversight?
- How does the BRSR Core assurance requirement, applicable from financial year 2024–25, change the disclosure expectations on CSR activities reported within the BRSR?
Summary
| Concept | Description |
|---|---|
| CSR Reporting Architecture | |
| Section 134(3)(o) | Statutory anchor in the Companies Act, 2013 requiring the board's report to include details of the CSR policy and the initiatives taken during the year |
| Rule 8 of the CSR Rules | Operational rule prescribing the format of the annual CSR report, the disclosure of impact assessment, and other compliance requirements |
| Annexure to Rule 8 | The detailed annexure that specifies what must be disclosed in the annual CSR report, including policy, committee, projects, expenditure, and unspent amounts |
| Rule 9 Website Disclosure | Requirement that the CSR committee composition, the policy, and the projects approved by the board be displayed on the company's website |
| Form CSR-2 | Annual filing introduced in 2022 as an addendum to the company's annual return, providing a centralised database of CSR activity to the Ministry of Corporate Affairs |
| Eligible and Excluded Activities | |
| Schedule VII Categories | The list of permitted CSR activities, broadly construed and refined by ministerial clarification and notification |
| Rule 2(1)(d) Excluded Activities | Categories of activity expressly excluded from CSR by the rule, including normal business, foreign activities, political contributions, employee-only activities, marketing sponsorship, and statutory obligations |
| Normal Course of Business Exclusion | Activities undertaken in the normal course of business of the company, treated as not constituting CSR except for narrow notified exceptions |
| Activities Outside India Exclusion | Activities undertaken outside India, broadly excluded except for training of Indian sports personnel for national or international representation |
| Political Contribution Exclusion | Any contribution to a political party, directly or indirectly, treated as outside the scope of CSR |
| Employee-Only Activity Exclusion | Activities benefiting only the employees of the company and their families, treated as outside the scope of CSR |
| Marketing Sponsorship Exclusion | Activities supported on a sponsorship basis for deriving marketing benefits for the company's products or services, treated as outside the scope of CSR |
| Modes of Implementation | |
| Direct Implementation | The mode in which the company itself, deploying its own staff and infrastructure, undertakes the CSR activity |
| Implementing Agency | A separately incorporated entity that delivers CSR activity on behalf of the contributing company, registered with the Ministry of Corporate Affairs on Form CSR-1 |
| Form CSR-1 Registration | The mandatory registration of every implementing agency with the Ministry of Corporate Affairs, in force since 1 April 2021 |
| Three-Year Track Record Requirement | Requirement that an independent third-party implementing agency demonstrate at least three years of experience in similar activities |
| Collaborative Implementation | The mode in which two or more companies collaborate on a CSR project, with each reporting its share of the contribution and the project |
| Funding Rules under the 2021 Amendment | |
| Administrative Overhead Cap | Five per cent ceiling on administrative overhead expenses chargeable to the CSR account, intended to direct resources to substantive activity |
| Capital Assets Created from CSR | Capital assets created out of CSR funds must be held by an implementing agency, by the beneficiaries, or by a public authority, and not by the contributing company |
| Surplus Arising from CSR Activity | Surplus from CSR activity does not form business profit; it must be ploughed back or transferred to the Unspent CSR Account or a Schedule VII fund |
| Set-Off of Excess CSR | Mechanism by which excess CSR spending in any year may be set off against the obligation of any of the immediately succeeding three financial years on a board resolution |
| Impact Assessment and Sustainability Reporting | |
| Impact Assessment (Rule 8(3)) | Mandatory independent impact assessment of CSR projects of ₹1 crore or more, applicable to companies with an average CSR obligation of ₹10 crore or more |
| BRSR Framework | SEBI framework for business responsibility and sustainability reporting applicable to the top one thousand listed entities by market capitalisation since 2022–23 |
| Nine NGRBC Principles | The principles of the National Guidelines on Responsible Business Conduct, providing the structural framework for the BRSR disclosures |
| BRSR Core Assurance | The subset of BRSR disclosures that must, since financial year 2024–25, be assured by an independent assurance provider |