Corporate Social Responsibility (CSR) in India transitioned from voluntary philanthropic spending to a strictly codified statutory obligation under Section 135 of the Companies Act, 2013 and the CSR Policy Rules.
Thresholds for CSR Applicability
Any company fulfilling any of the following criteria during the preceding financial year must mandatorily spend at least 2% of its average net profits made during the 3 immediately preceding financial years on approved Schedule VII CSR activities:
- Net worth of ₹500 Crore or more; OR
- Turnover of ₹1,000 Crore or more; OR
- Net profit of ₹5 Crore or more.
Failure to transfer unspent amounts to designated national funds or an Unspent CSR Account within the prescribed timeline incurs statutory penalties of up to ₹1 Crore for the company and ₹2 Lakhs for every officer in default.
